Audit Information |
12 Months Ended |
|---|---|
Dec. 31, 2024 | |
| Audit Information [Abstract] | |
| Auditor Name | KPMG LLP |
| Auditor Location | Denver, Colorado |
| Auditor Firm ID | 185 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Millions |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2024 |
Dec. 31, 2023 |
Dec. 31, 2022 |
|
| Statement of Comprehensive Income [Abstract] | |||
| NET LOSS | $ (276) | $ (2,004) | $ (4,793) |
| OTHER COMPREHENSIVE INCOME | |||
| Reclassification of realized loss on foreign currency translation to net loss on sale of businesses, net of $—, $—, and $— tax | 0 | 350 | 112 |
| Defined benefit pension plan adjustment, net of $—, $— and $— tax | 0 | 0 | 18 |
| Reclassification of net actuarial loss to net loss on the sale of businesses, net of $—, $— and $— tax | 0 | (22) | 0 |
| Foreign currency translation adjustment, net of $—, $(3) and $58 tax | 2 | (12) | (123) |
| Other comprehensive income, net of tax | 2 | 316 | 7 |
| COMPREHENSIVE LOSS | $ (274) | $ (1,688) | $ (4,786) |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Parenthetical) - USD ($) $ in Millions |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2024 |
Dec. 31, 2023 |
Dec. 31, 2022 |
|
| Statement of Comprehensive Income [Abstract] | |||
| Reclassification of realized loss on foreign currency translation to gain on sale of business, tax | $ 0 | $ 0 | $ 0 |
| Defined benefit pension plan adjustment, tax effect | 0 | 0 | 0 |
| Reclassification of net actuarial loss to net loss on the sale of businesses, tax | 0 | 0 | 0 |
| Foreign currency translation adjustment, tax | $ 0 | $ (3) | $ 58 |
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Millions |
Dec. 31, 2024 |
Dec. 31, 2023 |
|---|---|---|
| Statement of Financial Position [Abstract] | ||
| Allowance for doubtful accounts | $ 12 | $ 13 |
| Accumulated depreciation | $ 4,139 | $ 3,665 |
CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($) $ in Millions |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2024 |
Dec. 31, 2023 |
Dec. 31, 2022 |
|
| Statement of Cash Flows [Abstract] | |||
| Capitalized interest | $ 36 | $ 22 | $ 16 |
CONSOLIDATED STATEMENTS OF MEMBER'S EQUITY - USD ($) $ in Millions |
Total |
MEMBER'S EQUITY |
ACCUMULATED OTHER COMPREHENSIVE LOSS |
|---|---|---|---|
| Balance at beginning of period at Dec. 31, 2021 | $ 13,337 | $ (351) | |
| MEMBER'S EQUITY | |||
| Net loss | $ (4,793) | (4,793) | |
| Distributions | (1,425) | ||
| Contributions | 0 | ||
| Other | 0 | ||
| Other comprehensive income | 7 | ||
| Balance at end of period at Dec. 31, 2022 | 7,119 | (344) | |
| MEMBER'S EQUITY | |||
| TOTAL MEMBER'S EQUITY | 6,775 | (344) | |
| Net loss | (2,004) | (2,004) | |
| Distributions | (1,510) | ||
| Contributions | 0 | ||
| Other | 39 | ||
| Other comprehensive income | 316 | ||
| Balance at end of period at Dec. 31, 2023 | 3,644 | (28) | |
| MEMBER'S EQUITY | |||
| TOTAL MEMBER'S EQUITY | 3,616 | (28) | |
| Net loss | (276) | (276) | |
| Distributions | (3,156) | ||
| Contributions | 210 | ||
| Other | (200) | ||
| Other comprehensive income | 2 | ||
| Balance at end of period at Dec. 31, 2024 | $ 222 | (26) | |
| MEMBER'S EQUITY | |||
| TOTAL MEMBER'S EQUITY | $ 196 | $ (26) |
Background and Summary of Significant Accounting Policies |
12 Months Ended |
|---|---|
Dec. 31, 2024 | |
| Accounting Policies [Abstract] | |
| Background and Summary of Significant Accounting Policies | Note 1—Background and Summary of Significant Accounting Policies General We are a networking company with the goal of connecting people, data and applications quickly, securely and effortlessly. We are unleashing the world's digital potential by providing a broad array of integrated products and services to our domestic and global business customers. We operate one of the world’s most interconnected networks. Our platform empowers our customers to swiftly adjust digital programs to meet immediate demands, create efficiencies, accelerate market access and reduce costs, which allows our customers to rapidly evolve their IT programs to address dynamic changes. Our specific products and services are detailed in Note 4—Revenue Recognition. Basis of Presentation The accompanying consolidated financial statements include our accounts and the accounts of our subsidiaries in which we have a controlling interest. 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. We reclassified certain prior period amounts to conform to the current period presentation, including our revenue by product and service categories for 2023 and 2022. See Note 4—Revenue Recognition for additional information. These changes had no impact on total operating revenue, total operating expenses or net loss for any period. Segments Our operations are integrated into and reported as part of Lumen Technologies' operations. Lumen's CEO is our chief operating decision maker ("CODM") and reviews our financial information on an aggregate basis only in connection with our quarterly and annual reports that we file with the SEC. Our CODM assesses performance and allocates resources in conjunction with and based on the operations of Lumen Technologies. Consequently, we do not provide our discrete financial information to the CODM on a regular basis. As such, we have one reportable segment. Operating Expenses Our current definitions of operating expenses are as follows: •Cost of services and products (exclusive of depreciation and amortization) are expenses incurred in providing products and services to our customers. These expenses include: employee-related expenses directly attributable to operating and maintaining our network (such as salaries, wages, benefits and professional fees); facilities expenses (which include third-party telecommunications expenses we incur for using other carriers' networks to provide services to our customers); rents and utilities expenses; equipment sales expenses; and other expenses directly related to our operations; and •Selling, general and administrative expenses are corporate overhead and other operating expenses. These expenses include: employee-related expenses (such as salaries, wages, internal commissions, benefits and professional fees) directly attributable to selling products or services and employee-related expenses for administrative functions; marketing and advertising; property and other operating taxes and fees; external commissions; legal expenses associated with general matters; bad debt expense; and other selling, general and administrative expenses. These expense classifications may not be comparable to those of other companies. Summary of Significant Accounting Policies Use of Estimates Our consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles. These accounting principles require us to make certain estimates, judgments and assumptions. We believe that the estimates, judgments and assumptions we make when accounting for specific items and matters are reasonable, based on information available at the time they are made. These estimates, judgments and assumptions can materially affect the reported amounts of assets, liabilities and components of member's equity as of the dates of the consolidated balance sheets, as well as the reported amounts of revenue, expenses and components of cash flows during the periods presented in our other consolidated financial statements. We also make estimates in our assessments of potential losses in relation to threatened or pending tax and legal matters. See Note 13—Income Taxes and Note 16—Commitments, Contingencies and Other Items for additional information. For matters not related to income taxes, if a loss is considered probable and the amount can be reasonably estimated, we recognize an expense for the estimated loss. If we have the potential to recover a portion of the estimated loss from a third-party, we make a separate assessment of recoverability and reduce the estimated loss if recovery is also deemed probable. For matters related to income taxes, if we determine the impact of an uncertain tax position is more likely than not to be sustained upon audit by the relevant taxing authority, then we recognize a benefit for the largest amount that is more likely than not to be sustained. We do not recognize any portion of an uncertain tax position if the position has less than a 50% likelihood of being sustained. We recognize interest on the amount of unrecognized benefit from uncertain tax positions. For all of these and other matters, actual results could differ materially from our estimates. Revenue Recognition We earn most of our consolidated revenue from contracts with customers, primarily through the provision of communications and other services. Revenue from contracts with customers is accounted for under Accounting Standards Codification ("ASC") 606. We also earn revenue from leasing arrangements (primarily from fiber capacity and colocation agreements) which are not accounted for under ASC 606. Revenue is recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to receive in exchange for those goods or services. Revenue is recognized based on the following five-step model: •Identification of the contract with a customer; •Identification of the performance obligations in the contract; •Determination of the transaction price; •Allocation of the transaction price to the performance obligations in the contract; and •Recognition of revenue when, or as, we satisfy a performance obligation. We provide an array of communications services to business customers, including local voice, VPN, Ethernet, data, broadband, private line (including special access), network access, transport, voice, information technology, video and other ancillary services. We provide these services to a wide range of businesses, including global, enterprise, wholesale, government, and small and medium business customers. Certain contracts also include the sale of equipment, which is not significant to our business. We recognize revenue for services when we provide the applicable service or when control of a product is transferred. Recognition of certain payments received in advance of services being provided is deferred. These advance payments may include design, planning and engineering fees, as well as certain activation and installation charges. If these advance payments are not separate performance obligations, we recognize them as revenue over the actual or expected contract term using historical experience, which typically ranges from to five years depending on the service. In most cases, termination fees or other fees on existing contracts that are negotiated in conjunction with new contracts are deferred and recognized over the new contract term. For access services, we generally bill fixed monthly charges one month in advance to customers and recognize revenue as service is provided over the contract term in alignment with the customer's receipt of service. For usage and other ancillary services, we generally bill in arrears and recognize revenue as usage or delivery occurs. In most cases, the amount invoiced for our service offerings constitutes the price that would be billed on a standalone basis. In certain cases, customers may be permitted to modify their contracts. We evaluate the change in scope or price to identify whether the modification should be treated as a separate contract, as a termination of the existing contract and creation of a new contract, or as a change to the existing contract. Customer contracts are evaluated to determine whether the performance obligations are separable. If the performance obligations are deemed separable and separate earnings processes exist, the total transaction price that we expect to receive with the customer is allocated to each performance obligation based on its relative standalone selling price. The revenue associated with each performance obligation is then recognized as earned. We periodically sell transmission capacity on our network. These transactions are generally structured as indefeasible rights of use, commonly referred to as IRUs, which are the exclusive right to use a specified amount of capacity or fiber for a specified term, typically 20 years. In most cases, we account for the cash consideration received on transfers of transmission capacity as ASC 606 revenue, which is adjusted for the time value of money and is recognized ratably over the term of the agreement. Cash consideration received on transfers of dark fiber is accounted for as non-ASC 606 lease revenue, which we also recognize ratably over the term of the agreement. We do not recognize revenue on any contemporaneous exchanges of our optical capacity assets for other non-owned optical capacity assets. In connection with offering products and services provided to the end user by third-party vendors, we review the relationship between us, the vendor and the end user to assess whether revenue should be reported on a gross or net basis. In assessing whether revenue should be reported on a gross or net basis, we consider whether we act as a principal in the transaction and control the goods and services used to fulfill the performance obligations associated with the transaction. We have service level commitments pursuant to contracts with certain of our customers. To the extent that we determine that such service levels were not achieved or may not have been achieved, we estimate the amount of credits to be issued and record a corresponding reduction to revenue in the period that the service level commitment was not met or may not be met. Customer payments are made based on billing schedules included in our customer contracts, which is typically on a monthly basis. We defer (or capitalize) incremental contract acquisition and fulfillment costs and recognize (or amortize) such costs over the average contract life. Our deferred contract costs for our customers have average amortization periods of approximately 36 months. These deferred costs are periodically monitored to reflect any significant change in assumptions. See Note 4—Revenue Recognition for additional information. Affiliate Transactions We provide services to our affiliates that we also provide to external customers. These services are recognized as operating revenue-affiliates in our consolidated statements of operations. Services provided to us from our affiliates are recognized as operating expenses-affiliates on our consolidated statements of operations. Because of the significance of the services we provide to our affiliates and our affiliates provide to us, the results of operations, financial position and cash flows presented herein are not necessarily indicative of the results of operations, financial position and cash flows we would have achieved had we operated as a stand-alone entity during the periods presented. We recognize intercompany charges at the amounts billed to us by our affiliates and we recognize intercompany revenue for services we bill to our affiliates. The resulting net balance for transactions between us and our affiliates at the end of each period is reported as accounts receivables - affiliates or accounts payable - affiliates on the accompanying consolidated balance sheets. From time to time, to the extent permitted by our debt covenants, we make distributions to and receive contributions from our parent, which decrease or increase our capital resources for debt repayments or other purposes. Distributions and contributions are reflected on our consolidated statements of member's equity and our consolidated statements of cash flows reflects distributions and contributions made as financing activities. Non-cash distributions are reflected in the supplemental non-cash information regarding financing activities in our consolidated statements of cash flows. Our ultimate parent company, Lumen Technologies, is currently indebted to us under a revolving credit facility. For additional information, see Note 15—Affiliate Transactions. Legal Costs In the normal course of our business, we incur costs to hire and retain external legal counsel to advise us on finance, regulatory, litigation and other matters. Subject to certain exceptions, we expense these costs as the related services are received. Income Taxes Lumen Technologies treats our consolidated results as if we were a separate taxpayer. Our reported deferred tax assets and liabilities, as discussed below and in Note 13—Income Taxes, are primarily determined as a result of the application of the separate return method and therefore the settlement of these amounts is dependent upon our parent, Lumen Technologies, rather than tax authorities. We are required to pay our tax liabilities based upon our separate return taxable income. We are also included in the combined state tax returns filed by Lumen Technologies. The provision for income taxes consists of an amount for taxes currently payable, an amount for tax consequences deferred to future periods and adjustments to our liabilities for uncertain tax positions. We record deferred income tax assets and liabilities reflecting future tax consequences attributable to tax NOLs, tax credit carryforwards and differences between the financial statement carrying value of assets and liabilities and the tax basis of those assets and liabilities. Deferred taxes are computed using enacted tax rates expected to apply in the year in which the differences are expected to affect taxable income. The effect on deferred income tax assets and liabilities of a change in tax rate is recognized in earnings in the period that includes the enactment date. We establish valuation allowances when necessary to reduce deferred income tax assets to the amounts that we believe are more likely than not to be recovered. Each quarter we evaluate the need to retain or adjust each valuation allowance on our deferred tax assets. See Note 13—Income Taxes for additional information. Cash and Cash Equivalents Cash and cash equivalents include highly liquid investments that are readily convertible into cash and are not subject to significant risk from fluctuations in interest rates. As a result, the value at which cash and cash equivalents are reported in our consolidated financial statements approximates their fair value. In evaluating investments for classification as cash equivalents, we require that individual securities have original maturities of ninety days or less and that individual investment funds have dollar-weighted average maturities of ninety days or less. To preserve capital and maintain liquidity, we invest with financial institutions we deem to be of sound financial condition and in high quality and relatively risk-free investment products. Our cash investment policy limits the concentration of investments with specific financial institutions or among certain products and includes criteria related to credit worthiness of any particular financial institution. Book overdrafts occur when we have issued checks but they have not yet been presented to our controlled disbursement bank accounts for payment. Disbursement bank accounts allow us to delay funding of issued checks until the checks are presented for payment. Until the issued checks are presented for payment, the book overdrafts are included in accounts payable on our consolidated balance sheets. This activity is included in the operating activities section in our consolidated statements of cash flows. There were no book overdrafts included in accounts payable at December 31, 2024 or 2023, respectively. Restricted Cash Restricted cash consist primarily of cash and investments that serve to collateralize our outstanding letters of credit and certain performance and operating obligations. Restricted cash is recorded as current or non-current assets in the consolidated balance sheets depending on the duration of the restriction and the purpose for which the restriction exists. Accounts Receivable and Allowance for Credit Losses Accounts receivable are recognized based upon the amount due from customers for the services provided or at cost for other receivables, less an allowance for credit losses. We use a loss rate method to estimate our allowance for credit losses. For more information on our methodology for estimating our allowance for credit losses, see Note 6—Credit Losses on Financial Instruments. We generally consider our accounts past due if they are outstanding over 30 days. Our past due accounts are written off against our allowance for credit losses and any recoveries of accounts previously written off are generally recognized as a reduction in bad debt expense in the period received. The carrying value of accounts receivable net of the allowance for credit losses approximates fair value. Concentration of Credit Risk We provide communications services to a wide range of wholesale and enterprise customers, ranging from well capitalized global enterprises to small early stage companies primarily in the United States. Credit risk with respect to accounts receivable is generally diversified due to the large number of entities comprising our customer base and their dispersion across many different industries and geographical regions. We perform ongoing credit evaluations of our customers' financial condition and generally require no collateral from our customers, although letters of credit and deposits are required in certain limited circumstances. We have, from time to time, entered into agreements with value added resellers and other channel partners to reach enterprise markets for voice services. We have policies and procedures in place to evaluate the financial condition of these resellers prior to initiating service to the final customer. We are not able to predict changes in the financial stability of our customers. Any material changes in the financial status of any one or a particular group of customers may cause us to adjust our estimate of the recoverability of receivables and could have a material effect on our results of operation. Assets Held for Sale We classify assets and related liabilities as held for sale when: (i) management has committed to a plan to sell the assets, (ii) the net assets are available for immediate sale, (iii) there is an active program to locate a buyer and (iv) the sale and transfer of the net assets is probable within one year. Assets and liabilities held for sale are presented separately on our consolidated balance sheets with a valuation allowance, if necessary, to recognize the net carrying amount at the lower of cost or fair value, less costs to sell. Depreciation of property, plant and equipment and amortization of finite-lived intangible assets and right-of-use assets are not recorded while these assets are classified as held for sale. For each period that assets are classified as being held for sale, they are tested for recoverability. See Note 2—Divestitures of the Latin American and EMEA Businesses and Note 9—Property, Plant And Equipment for additional information. Property, Plant and Equipment We record purchased and constructed property, plant and equipment at cost, plus the estimated value of any associated legally or contractually required retirement obligations. We depreciate our property, plant and equipment using the straight-line method. Leasehold improvements are amortized over the shorter of the useful lives of the assets or the expected lease term. Expenditures for maintenance and repairs are expensed as incurred. During the construction phase of network and other internal-use capital projects, we capitalize related employee and interest costs. Property, plant and equipment supplies used internally are carried at average cost, except for significant individual items which are carried at actual cost. We perform annual internal reviews to evaluate the reasonableness of the depreciable lives for our property, plant and equipment. Our reviews take into account actual usage, the physical condition of our property, plant, and equipment, industry data, and other relevant factors. Our remaining useful life assessments evaluate the possible loss in service value of assets that may precede the physical retirement. Assets shared among many customers may lose service value as those customers reduce their use of the asset. However, the asset is not retired until all customers no longer utilize the asset and we determine there is not alternative use for the asset. We have asset retirement obligations associated with the legally or contractually required removal of a limited group of property, plant and equipment assets from leased properties and the disposal of certain hazardous materials present in our owned properties. When an asset retirement obligation is identified, usually in association with the acquisition of the asset, we record the fair value of the obligation as a liability. The fair value of the obligation is also capitalized as property, plant and equipment and then amortized over the estimated remaining useful life of the associated asset. Where the removal obligation is not legally binding, we expense the net cost to remove assets in the period in which the costs are actually incurred. We review long-lived tangible assets for impairment whenever facts and circumstances indicate that the carrying amounts of the assets may not be recoverable. For assessment purposes, long-lived assets are grouped with other assets and liabilities at the lowest identifiable level for which we generate cash flows independently of other groups of assets and liabilities, absent a material change in operations. An impairment loss is recognized only if the carrying amount of the asset group is not recoverable and exceeds its estimated fair value. Recoverability of the asset group to be held and used is assessed by comparing the carrying amount of the asset group to the estimated undiscounted future net cash flows expected to be generated by the asset group. If the asset group's carrying value is not recoverable, we recognize an impairment charge for the amount by which the carrying amount of the asset group exceeds its estimated fair value. Goodwill, Customer Relationships and Other Intangible Assets Intangible assets arising from business combinations, such as goodwill, customer relationships, capitalized software, trademarks and trade names, are initially recorded at estimated fair value. We amortize customer relationships primarily over an estimated life of to 14 years, using the straight-line method, depending on the type of customer. We amortize capitalized software using the straight-line method primarily over estimated lives ranging up to seven years. We amortized our other intangible assets over an estimated life of five years prior to becoming fully amortized in the fourth quarter of 2023. Other intangible assets not arising from business combinations are initially recorded at cost. Where there are no legal, regulatory, contractual or other factors that would reasonably limit the useful life of an intangible asset, we classify the intangible asset as indefinite-lived and such intangible assets are not amortized. Internally used software, whether purchased or developed by us, is capitalized and amortized using the straight-line method over its estimated useful life. We have capitalized certain costs associated with software such as costs of employees devoted to software development and external direct costs for materials and services. Costs associated with software to be used for internal purposes are expensed until the point at which the project has reached the development stage. Subsequent additions, modifications or upgrades to internal-use software are capitalized only to the extent that they allow the software to perform a task it previously did not perform. Software maintenance, data conversion and training costs are expensed in the period in which they are incurred. We review the remaining economic lives of our capitalized software annually. Capitalized software is included in other intangible assets, net, in our consolidated balance sheets. Prior to becoming fully impaired in the second quarter of 2023, we were required to assess our goodwill for impairment annually, or more frequently if an event occurred or circumstances changed that would indicate it was more likely than not the fair value of our reporting unit was less than the carrying value. The impairment assessment was performed at the reporting unit level. We have determined that our operations consist of one reporting unit, consistent with our determination that our business consists of one operating segment. We were required to write-down the value of goodwill in periods in which the carrying amount of our reporting unit's equity exceeded the estimated fair value of the equity of the reporting unit, limited to the goodwill balance. For more information, see Note 3—Goodwill, Customer Relationships and Other Intangible Assets. Foreign Currency Local currencies of our foreign subsidiaries are the functional currencies for financial reporting purposes except for certain foreign subsidiaries, primarily in Latin America prior to the August 1, 2022 sale of our Latin American business. For operations outside the United States that have functional currencies other than the U.S. dollar, assets and liabilities are translated to U.S. dollars at period-end exchange rates, and revenue, expenses and cash flows are translated using average monthly exchange rates. Prior to the November 1, 2023 sale of our EMEA business and the August 1, 2022 sale of our Latin American business, a significant portion of our non-United States subsidiaries used the British pound, the Euro or the Brazilian Real, as their functional currency, each of which experienced significant fluctuations against the U.S. dollar during the periods covered by this report when we operated the divested businesses. We recognize foreign currency translation gains and losses as a component of accumulated other comprehensive loss in member's equity in our consolidated balance sheet and in our consolidated statements of comprehensive (loss) income in accordance with accounting guidance for foreign currency translation. Prior to the completion of our divestitures as discussed in Note 2—Divestitures of the Latin American and EMEA Businesses, we considered the majority of our investments in our foreign subsidiaries to be long-term in nature. Our foreign currency transaction gains (losses), including where transactions with our non-United States subsidiaries are not considered to be long-term in nature, are included within Other income, net on our consolidated statements of operations. Change in Accounting Estimate During the first quarter of 2024, we updated our analysis of economic lives of owned fiber network assets. As of January 1, 2024, we extended the estimated economic life and depreciation period of such assets from 25 years to 30 years to better reflect the physical life of the assets that we have experienced and absence of technological changes that would replace fiber. The change in accounting estimate decreased depreciation expense by approximately $27 million, $20 million net of tax, for the year ended December 31, 2024. Recently Adopted Accounting Pronouncements Segments On January 1, 2024 we adopted Accounting Standards Update ("ASU") 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures.” This ASU is intended to improve reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. The ASU does not change how a public entity identifies its operating segments, aggregates them or applies quantitative thresholds to determine reportable segments. Public entities with a single reportable segment are required to provide the new disclosures and all the disclosures required under ASC 280, "Segment Reporting." We did not early adopt this standard. The adoption of this ASU did not have a material impact on our consolidated financial statements. Investments On January 1, 2024, we adopted ASU 2023-02, “Investments-Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method.” This ASU allows 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. The adoption of this ASU did not have any impact on our consolidated financial statements. On January 1, 2024, we adopted ASU 2022-03, “Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions.” This ASU clarifies 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 its fair value. The adoption of this ASU did not have any impact on our consolidated financial statements. Leases On January 1, 2024, we adopted ASU 2023-01, “Leases (Topic 842): Common Control Arrangements.” This ASU requires all entities to amortize leasehold improvements associated with common control leases over the useful life to the common control group. The adoption of this ASU did not have any impact on our consolidated financial statements. On January 1, 2022, we adopted ASU 2021-05, “Leases (Topic 842): Lessors—Certain Leases with Variable Lease Payments.” This ASU (i) amends the lease classification requirements for lessors, (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 this ASU did not have a material impact on our consolidated financial statements. Reference Rate Reform In December 2022, the Financial Accounting Standards Board (“FASB”) issued ASU 2022-06, “Reference Rate Reform (Topic 848) – Deferral of the Sunset Date of Topic 848." This ASU, which was effective upon issuance, extends the period of time preparers can utilize the reference rate reform relief guidance in Topic 848, by deferring the sunset date from December 31, 2022, to December 31, 2024, after which entities will no longer be permitted to apply the relief in Topic 848. Based on our review of our key material contracts through December 31, 2024, this ASU does not have a material impact on our consolidated financial statements. Supplier Finance Programs On January 1, 2023, we adopted ASU 2022-04, “Liabilities-Supplier Finance Program (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations.” This ASU requires that a company that uses a supplier finance program in connection with the purchase of goods or services to 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 the potential magnitude of program transactions. The adoption of this ASU did not have a material impact on 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.” 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 this ASU did not have a material impact on our consolidated financial statements. Adoption of Other ASUs In July 2023, the FASB issued ASU 2023-03, “Presentation of Financial Statements (Topic 205), Income Statement—Reporting Comprehensive Income (Topic 220), Distinguishing Liabilities from Equity (Topic 480), Equity (Topic 505), and Compensation—Stock Compensation (Topic 718): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 120, SEC Staff Announcement at the March 24, 2022 EITF Meeting, and Staff Accounting Bulletin Topic 6.B, Accounting Series Release 280—General Revision of Regulation S-X: Income or Loss Applicable to Common Stock.” This ASU became effective for us once the addition to the FASB Codification was made available in July 2023. This ASU amends or supersedes various SEC paragraphs within the applicable codification to conform to past SEC staff announcements. This ASU does not provide any new guidance. The adoption of this ASU did not have any impact on our consolidated financial statements. Recently Issued Accounting Pronouncements In November 2024, the FASB issued ASU 2024-04, "Debt—Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments." This ASU clarifies the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as induced conversions rather than as debt extinguishments. This standard is effective for the annual period of fiscal 2026, and early adoption is permitted. As of December 31, 2024, we do not hold convertible debt instruments and do not expect this ASU will have any impact on our consolidated financial statements. In November 2024, the FASB issued ASU 2024-03 "Disaggregation of Income Statement Expenses." This ASU requires additional footnote disclosure of the details of certain income statement expense line items as well as, additional disclosure about selling expenses. This standard is effective for the annual period of fiscal 2027, and early adoption is permitted. The guidance is to be applied prospectively, with the option for retrospective application. We are currently evaluating the impact the adoption of this standard will have on our disclosures. In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” This ASU requires that public business entities must annually (1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than 5 percent of the amount computed by multiplying pretax income or loss by the applicable statutory income tax rate).” This ASU will become effective for us in the annual period of fiscal 2025 and early adoption is permitted. We have chosen not to early adopt this ASU and are currently evaluating its impact on our consolidated financial statements, including our annual disclosure within our Income Taxes footnote. In December 2023, the FASB issued ASU 2023-08, “Intangibles—Goodwill and Other—Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets.” This ASU is intended to improve the accounting for certain crypto assets by requiring an entity to measure those crypto assets at fair value each reporting period with changes in fair value recognized in net income. The amendments also improve the information provided to investors about an entity’s crypto asset holdings by requiring disclosure about significant holdings, contractual sale restrictions, and changes during the reporting period. This ASU will become effective for us in the first quarter of fiscal 2025 and early adoption is permitted. As of December 31, 2024, we do not hold crypto assets and do not expect this ASU to have any impact on our consolidated financial statements. In October 2023, the FASB issued ASU 2023-06, “Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative.” This ASU incorporates certain SEC disclosure requirements into the FASB Codification. The amendments in the ASU are expected to clarify or improve disclosure and presentation requirements of a variety of FASB Codification topics, allow users to more easily compare entities subject to the SEC’s existing disclosures with those entities that were not previously subject to the requirements, and align the requirements in the FASB Codification with the SEC’s regulations. This ASU will become effective for each amendment on the effective date of the SEC's corresponding disclosure rule changes. As of December 31, 2024, we do not expect this ASU will have any impact on our consolidated financial statements. In August 2023, the FASB issued ASU 2023-05, “Business Combinations – Joint Venture Formations (Subtopic 805-60): Recognition and Initial Measurement.” This ASU applies to the formation of entities that meet the definition of a joint venture (or a corporate joint venture). The amendments in the ASU require that a joint venture apply a new basis of accounting upon formation. This ASU will become effective for us in the first quarter of fiscal 2025 and early adoption is permitted. As of December 31, 2024, we do not expect this ASU will have any impact on our consolidated financial statements.
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Divestitures of the Latin American and EMEA Businesses |
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| Discontinued Operations and Disposal Groups [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Divestitures of the Latin American and EMEA Businesses | Note 2—Divestitures of the Latin American and EMEA Businesses Latin American Business On August 1, 2022, affiliates of Level 3 Parent, LLC sold its Latin American business pursuant to a definitive agreement dated July 25, 2021 for pre-tax cash proceeds of approximately $2.7 billion. For the year ended December 31, 2022, we recorded a $123 million net pre-tax gain on disposal associated with the sale of our Latin American business. This gain is reflected as operating income within the consolidated statements of operations. In connection with the sale, Lumen entered into a transition services agreement under which it provides to the purchaser various support services. In addition, Lumen and the purchaser entered into commercial agreements whereby they provide each other various network and other commercial services. Lumen also agreed to indemnify the purchaser for certain matters for which future cash payments by Lumen could be required. Lumen estimated the fair value of these indemnifications to be $86 million and reduced our gain on the sale accordingly. See Note 12—Fair Value of Financial Instruments for detail related to the carrying value and fair value of these indemnifications as of December 31, 2024 and 2023. The Latin American business was included in our continuing operations and classified as assets and liabilities held for sale on our consolidated balance sheets through the closing of the transaction on August 1, 2022. As a result of closing the transaction, we derecognized $2.4 billion of net assets, primarily made up of (i) property, plant and equipment, net of accumulated depreciation, of $1.7 billion, (ii) goodwill of $719 million, (iii) other intangible assets, net of accumulated amortization, of $140 million, and (iv) deferred income tax liabilities, net, of $154 million. EMEA Business On November 1, 2023, affiliates of Level 3 Parent, LLC completed the sale of its operations in EMEA business to Colt Technology Services Group Limited, a portfolio company of Fidelity Investments, for pre-tax cash proceeds of $1.7 billion after certain closing adjustments and transaction costs. This consideration is further subject to other post-closing adjustments and indemnities set forth in the Purchase Agreement, as amended and supplemented to date. In connection with the sale, we entered into a transition services agreement under which we provide the purchaser various support services. In addition, Lumen and the purchaser entered into commercial agreements whereby they provide each other various network and other commercial services. The classification of the EMEA business as held for sale was considered an event or change in circumstance which required an assessment of the goodwill of the disposal group for impairment each reporting period until disposal. We performed a pre-classification and post-classification goodwill impairment test of the disposal group as described further in Note 3—Goodwill, Customer Relationships and Other Intangible Assets. As a result of our impairment tests, we determined the EMEA business disposal group was impaired resulting in a non-cash, non-tax-deductible goodwill impairment charge of $224 million in the fourth quarter of 2022. As a result of our evaluation of the recoverability of the carrying value of the assets and liabilities held for sale relative to the agreed upon sales price, adjusted for costs to sell, we recorded an estimated loss on disposal of $616 million during the year ended December 31, 2022 in the consolidated statement of operations and a valuation allowance included in assets held for sale on the consolidated balance sheet as of December 31, 2022. For the year ended December 31, 2023, we recorded a $104 million net loss on disposal associated with the sale of our EMEA business. This loss is reflected as within the consolidated statements of operations. The EMEA business was included in our continuing operations and classified as assets and liabilities held for sale on our consolidated balance sheets through the closing of the transaction on November 1, 2023. As a result of closing the transaction, we derecognized $1.4 billion of net assets, the principal components of which were as follows:
______________________________________________________________________ (1) Includes the impact of $350 million realized loss on foreign currency translation, net of tax, reclassified out of accumulated other comprehensive loss as of December 31, 2023 to the valuation allowance and loss on sale of the EMEA business. We do not believe these divestiture transactions represent a strategic shift for us. Therefore, the divested businesses discussed above did not meet the criteria to be classified as discontinued operations. As a result, we continued to report our operating results for the Latin American and EMEA businesses in our consolidated operating results through their respective disposal dates of August 1, 2022 and November 1, 2023, respectively.
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Goodwill, Customer Relationships and Other Intangible Assets |
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| Goodwill, Customer Relationships and Other Intangible Assets | Note 3—Goodwill, Customer Relationships and Other Intangible Assets Customer relationships and other intangible assets consisted of the following:
______________________________________________________________________ (1)For the year ended December 31, 2023, customer relationships decreased $121 million in conjunction with the sale of select CDN contracts in the fourth quarter of 2023 that resulted in a net loss of $73 million included in selling, general and administrative expenses in our consolidated statement of operations. As of December 31, 2024 and 2023, the gross carrying amount of customer relationships and capitalized software was $8.5 billion and $8.6 billion, respectively. Our goodwill was derived from Lumen's 2017 acquisition of us where the purchase price exceeded the fair value of the net assets acquired. Prior to becoming fully impaired in the second quarter of 2023, we were 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 were 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 was October 31, at which date we assessed goodwill at our reporting unit. In reviewing the criteria for reporting units, we determined that our operations consisted of one reporting unit. Second Quarter 2023 Goodwill Impairment Analysis During the second quarter of 2023, the Company determined circumstances existed indicating it was more likely than not that the carrying value of our reporting unit exceeded its fair value. Given the continued erosion in Lumen's market capitalization, we determined our quantitative impairment analysis would estimate the fair value of our reporting unit 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 earnings before interest, tax, depreciation and amortization ("EBITDA") multiples between 1.5x and 4.3x and 4.6x and 10.5x, respectively. The revenue and EBITDA multiples were below these comparable market multiples. For the three months ended June 30, 2023, based on our assessment performed as described above, we concluded the estimated fair value was less than our carrying value of equity. As a result, our goodwill became fully impaired and we recorded a non-cash, non-tax-deductible goodwill impairment charge of $2.0 billion for the three months ended June 30, 2023. The market approach that we used in the quarter ended June 30, 2023 test 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 regarding the size of our impairments. 2022 Goodwill Impairment Analyses As of October 31, 2022, we estimated the fair value of equity of our reporting unit by considering both a market approach and a discounted cash flow method. We discounted the projected cash flows using a rate that represented weighted average cost of capital of 9.4% as of the assessment date, which comprised an after-tax cost of debt of 4.8% and a cost of equity of 14.0%. We utilized company comparisons and analyst reports within the telecommunications industry which at the time of assessment supported a range of fair values derived from annualized revenue and EBITDA multiples between 1.8x and 4.6x and 4.7x and 10.8x, respectively, resulting in an overall company revenue and EBITDA multiple of 2.5x and 7.1x, respectively. The market approach method includes the use of comparable multiples of publicly traded companies whose services are comparable to ours. The discounted cash flow method is based on the present value of projected cash flows and a terminal value equal to the present value of all normalized cash flows after the projection period. As of October 31, 2022, based on our assessment performed, the carrying value of our equity exceeded our fair value of equity and as a result, we recorded a non-cash, non-tax-deductible goodwill impairment charge of approximately $4.4 billion at October 31, 2022. The classification of the EMEA business as being held for sale as described in Note 2—Divestitures of the Latin American and EMEA Businesses, was considered an event or change in circumstance which required an assessment of our goodwill for impairment as of October 31, 2022. We performed a pre-announcement goodwill impairment test described above to determine whether there was an impairment prior to the classification of these assets as held for sale and to determine the November 2, 2022 fair values to be utilized for goodwill allocation regarding the disposal group to be classified as assets held for sale. We also performed a post-announcement goodwill impairment test using our estimated post-divestiture cash flows and carrying value of equity to evaluate whether the fair value that will remain following the divestiture exceeds the carrying value of the equity after classification of assets held for sale. We concluded no impairment existed following the divestiture. Separate from the annual, pre-announcement and post-announcement goodwill assessments discussed above, we performed an assessment of our EMEA business disposal group for impairment using the purchase price compared to the carrying value of the EMEA business net assets. As a result, we concluded the EMEA business disposal group was impaired, resulting in a non-cash, non-tax-deductible goodwill impairment charge of $224 million. See Note 2—Divestitures of the Latin American and EMEA Businesses for additional information regarding the purchase price, carrying value, and impairment for goodwill of the EMEA business. The following table shows the rollforward of goodwill from December 31, 2022 through December 31, 2023:
_______________________________________________________________________________ (1)Goodwill at December 31, 2022 is net of accumulated impairment loss of $8.2 billion. Total amortization expense for finite-lived intangible assets for the years ended December 31, 2024, 2023 and 2022 was $729 million, $714 million and $744 million, respectively. As of December 31, 2024, the weighted average remaining useful lives of our finite-lived intangible assets was approximately six years in total; six years for customer relationships, and four years for capitalized software. We estimate that future total amortization expense for finite-lived intangible assets will be as follows:
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Revenue Recognition |
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| Revenue Recognition | Note 4—Revenue Recognition We categorize our products and services revenue among the following categories: •Grow, which includes existing and emerging products and services in which we are significantly investing, including our colocation, dark fiber and conduit, Edge Cloud, IP, managed security, software-defined wide area networks ("SD WAN"), Unified Communications and Collaboration ("UC&C") and wavelengths services; •Nurture, which includes our more mature offerings, including ethernet and VPN data networks services; •Harvest, which includes our legacy services managed for cash flow, including Time Division Multiplexing voice, and private line services; •Other, which includes primarily managed and professional service solutions and content delivery network ("CDN") revenue, prior to the sale of select CDN contracts in late 2023; and •Affiliate Services, which includes communications services provided to our affiliates that we also provide to our external customers. From time to time, we may change the categorization of our products and services. Reconciliation of Total Revenue to Revenue from Contracts with Customers The following tables provide our total revenue by product and service category. They also provide 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. The amounts in the tables below include revenue for the Latin American and EMEA businesses prior to their sales on August 1, 2022 and November 1, 2023, respectively:
_______________________________________________________________ (1) Includes lease revenue which is not within the scope of ASC 606. We do not have any single external customer that comprises more than 10% of our total consolidated operating revenue. Substantially all of our consolidated revenue comes from customers located in the United States. Customer Receivables and Contract Balances The following table provides balances of customer receivables, contract assets and contract liabilities, net of amounts classified as held for sale:
Contract liabilities are consideration we have received from our customers or billed in advance of providing the 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 to five years depending on the service. Contract liabilities are included within Deferred revenue in our consolidated balance sheets. During the years ended December 31, 2024 and 2023, we recognized $120 million and $139 million, respectively, of revenue that was included in contract liabilities of $222 million and $281 million as of January 1, 2024 and 2023, respectively, including contract liabilities that were classified as held for sale. Performance Obligations As of December 31, 2024, we expect to recognize approximately $4.2 billion of revenue in the future related to performance obligations associated with existing customer contracts that are partially or wholly unsatisfied. As of December 31, 2024, the transaction price related to unsatisfied performance obligation that are expected to be recognized in 2025, 2026 and thereafter was $2.0 billion, $1.2 billion and $1.0 billion, 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:
_____________________________________________________________________ (1)Beginning of period balance for the year ended December 31, 2023 excludes $6 million of acquisition costs and no fulfillment costs classified as held for sale related to the EMEA business. 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 services to customers, including labor and materials consumed for these activities. We amortize deferred acquisition and fulfillment costs based on the transfer of services on a straight-line basis over the average expected contract life of approximately 36 months for our business customers. We include amortized fulfillment costs in cost of services and products and amortized acquisition costs in Selling, general and administrative expenses in our consolidated statements of operations. We include the amount of deferred costs that are anticipated to be amortized in the next 12 months in other current assets on our consolidated balance sheets. The amount of deferred costs expected to be amortized beyond 12 months is included in other non-current assets on our consolidated balance sheets. We assess deferred acquisition and fulfillment costs for impairment on a quarterly basis.
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Leases |
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| Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Leases | Note 5—Leases We primarily lease various office facilities, colocation facilities, equipment and transmission capacity to or from third parties. Leases with an initial term of twelve months or less are not recorded on our consolidated balance sheets; we recognize lease expense for these leases on a straight-line basis over the lease term. We determine if an arrangement is a lease at inception and whether that lease meets the classification criteria of a finance or operating lease at the commencement date. Lease-related assets, or right-of-use assets, are recognized at the lease commencement date at amounts equal to the respective lease liabilities. Lease-related liabilities are recognized at the present value of the remaining contractual fixed lease payments, discounted using our incremental borrowing rates. As part of the present value calculation for the lease liabilities, we use an incremental borrowing rate as the rates implicit in the leases are not readily determinable. The incremental borrowing rates used for lease accounting are based on our unsecured rates, adjusted to approximate the rates at which we could borrow on a collateralized basis over a term similar to the recognized lease term. We apply the incremental borrowing rates to lease components using a portfolio approach based upon the length of the lease term and the reporting entity in which the lease resides. Operating lease expense is recognized on a straight-line basis over the lease term, while variable lease payments are expensed as incurred. Operating lease assets are included in Other, net under Other assets on our consolidated balance sheets. Some of our lease arrangements contain lease components, non-lease components (including common-area maintenance costs) and executory costs (including real estate taxes and insurance costs). We generally account for each component separately based on the estimated standalone price of each component. For colocation leases, we account for the lease and non-lease components as a single lease component. Many of our lease agreements contain renewal options; however, we do not recognize right-of-use assets or lease liabilities for renewal periods unless we determine that we are reasonably certain of renewing the lease. Certain leases also include options to purchase the leased property. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain to be exercised. Our lease agreements do not generally contain any material residual value guarantees or material restrictive covenants. Lease expense consisted of the following:
We lease various equipment, office facilities, retail outlets, switching facilities and other network sites or components from third parties. These leases, with few exceptions, provide for renewal options and rent escalations that are either fixed or based on the consumer price index. Any rent abatements, along with rent escalations, are included in the computation of rent expense calculated on a straight-line basis over the lease term. The lease term for most leases includes the initial non-cancelable term plus any term under renewal options that we believe are reasonably assured. On a regular basis, we rationalize our lease footprint. When we determine that we no longer need leased space, we may incur accelerated lease costs. Our accelerated lease costs in December 31, 2024, 2023 and 2022 were not material. For the years ended December 31, 2024, 2023 and 2022, our gross rental expense, including the accelerated lease costs discussed above, was $403 million, $417 million and $384 million, respectively. We also received sublease rental income for the years ended December 31, 2024, 2023 and 2022 of $13 million, $14 million and $14 million, respectively. Supplemental consolidated balance sheet information and other information related to leases is included below:
(1) Includes affiliate operating lease assets of $234 million and $311 million as of December 31, 2024 and 2023, respectively. (2) Includes current portion of affiliate operating lease liabilities of $113 million and $129 million as of December 31, 2024 and 2023, respectively. (3) Includes noncurrent portion of affiliate operating lease liabilities of $128 million and $201 million as of December 31, 2024 and 2023, respectively. Supplemental consolidated cash flow statement information related to leases is included below:
As of December 31, 2024, maturities of lease liabilities were as follows:
As of December 31, 2024, we had no material operating or finance leases that had not yet commenced. Operating Lease Revenue We lease various dark fiber and conduit, office facilities and colocation facilities to third parties under operating leases. Lease and sublease income are included in operating revenue in the consolidated statements of operations. See "Revenue Recognition" in Note 1—Background and Summary of Significant Accounting Policies. For the years ended December 31, 2024, 2023 and 2022 our was $694 million, $676 million and $746 million, respectively, which represents 11% of our operating revenue for year ended December 31, 2024 and 10% of our operating revenue for each of the years ended December 31, 2023 and 2022.
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| Leases | Note 5—Leases We primarily lease various office facilities, colocation facilities, equipment and transmission capacity to or from third parties. Leases with an initial term of twelve months or less are not recorded on our consolidated balance sheets; we recognize lease expense for these leases on a straight-line basis over the lease term. We determine if an arrangement is a lease at inception and whether that lease meets the classification criteria of a finance or operating lease at the commencement date. Lease-related assets, or right-of-use assets, are recognized at the lease commencement date at amounts equal to the respective lease liabilities. Lease-related liabilities are recognized at the present value of the remaining contractual fixed lease payments, discounted using our incremental borrowing rates. As part of the present value calculation for the lease liabilities, we use an incremental borrowing rate as the rates implicit in the leases are not readily determinable. The incremental borrowing rates used for lease accounting are based on our unsecured rates, adjusted to approximate the rates at which we could borrow on a collateralized basis over a term similar to the recognized lease term. We apply the incremental borrowing rates to lease components using a portfolio approach based upon the length of the lease term and the reporting entity in which the lease resides. Operating lease expense is recognized on a straight-line basis over the lease term, while variable lease payments are expensed as incurred. Operating lease assets are included in Other, net under Other assets on our consolidated balance sheets. Some of our lease arrangements contain lease components, non-lease components (including common-area maintenance costs) and executory costs (including real estate taxes and insurance costs). We generally account for each component separately based on the estimated standalone price of each component. For colocation leases, we account for the lease and non-lease components as a single lease component. Many of our lease agreements contain renewal options; however, we do not recognize right-of-use assets or lease liabilities for renewal periods unless we determine that we are reasonably certain of renewing the lease. Certain leases also include options to purchase the leased property. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain to be exercised. Our lease agreements do not generally contain any material residual value guarantees or material restrictive covenants. Lease expense consisted of the following:
We lease various equipment, office facilities, retail outlets, switching facilities and other network sites or components from third parties. These leases, with few exceptions, provide for renewal options and rent escalations that are either fixed or based on the consumer price index. Any rent abatements, along with rent escalations, are included in the computation of rent expense calculated on a straight-line basis over the lease term. The lease term for most leases includes the initial non-cancelable term plus any term under renewal options that we believe are reasonably assured. On a regular basis, we rationalize our lease footprint. When we determine that we no longer need leased space, we may incur accelerated lease costs. Our accelerated lease costs in December 31, 2024, 2023 and 2022 were not material. For the years ended December 31, 2024, 2023 and 2022, our gross rental expense, including the accelerated lease costs discussed above, was $403 million, $417 million and $384 million, respectively. We also received sublease rental income for the years ended December 31, 2024, 2023 and 2022 of $13 million, $14 million and $14 million, respectively. Supplemental consolidated balance sheet information and other information related to leases is included below:
(1) Includes affiliate operating lease assets of $234 million and $311 million as of December 31, 2024 and 2023, respectively. (2) Includes current portion of affiliate operating lease liabilities of $113 million and $129 million as of December 31, 2024 and 2023, respectively. (3) Includes noncurrent portion of affiliate operating lease liabilities of $128 million and $201 million as of December 31, 2024 and 2023, respectively. Supplemental consolidated cash flow statement information related to leases is included below:
As of December 31, 2024, maturities of lease liabilities were as follows:
As of December 31, 2024, we had no material operating or finance leases that had not yet commenced. Operating Lease Revenue We lease various dark fiber and conduit, office facilities and colocation facilities to third parties under operating leases. Lease and sublease income are included in operating revenue in the consolidated statements of operations. See "Revenue Recognition" in Note 1—Background and Summary of Significant Accounting Policies. For the years ended December 31, 2024, 2023 and 2022 our was $694 million, $676 million and $746 million, respectively, which represents 11% of our operating revenue for year ended December 31, 2024 and 10% of our operating revenue for each of the years ended December 31, 2023 and 2022.
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| Leases | Note 5—Leases We primarily lease various office facilities, colocation facilities, equipment and transmission capacity to or from third parties. Leases with an initial term of twelve months or less are not recorded on our consolidated balance sheets; we recognize lease expense for these leases on a straight-line basis over the lease term. We determine if an arrangement is a lease at inception and whether that lease meets the classification criteria of a finance or operating lease at the commencement date. Lease-related assets, or right-of-use assets, are recognized at the lease commencement date at amounts equal to the respective lease liabilities. Lease-related liabilities are recognized at the present value of the remaining contractual fixed lease payments, discounted using our incremental borrowing rates. As part of the present value calculation for the lease liabilities, we use an incremental borrowing rate as the rates implicit in the leases are not readily determinable. The incremental borrowing rates used for lease accounting are based on our unsecured rates, adjusted to approximate the rates at which we could borrow on a collateralized basis over a term similar to the recognized lease term. We apply the incremental borrowing rates to lease components using a portfolio approach based upon the length of the lease term and the reporting entity in which the lease resides. Operating lease expense is recognized on a straight-line basis over the lease term, while variable lease payments are expensed as incurred. Operating lease assets are included in Other, net under Other assets on our consolidated balance sheets. Some of our lease arrangements contain lease components, non-lease components (including common-area maintenance costs) and executory costs (including real estate taxes and insurance costs). We generally account for each component separately based on the estimated standalone price of each component. For colocation leases, we account for the lease and non-lease components as a single lease component. Many of our lease agreements contain renewal options; however, we do not recognize right-of-use assets or lease liabilities for renewal periods unless we determine that we are reasonably certain of renewing the lease. Certain leases also include options to purchase the leased property. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain to be exercised. Our lease agreements do not generally contain any material residual value guarantees or material restrictive covenants. Lease expense consisted of the following:
We lease various equipment, office facilities, retail outlets, switching facilities and other network sites or components from third parties. These leases, with few exceptions, provide for renewal options and rent escalations that are either fixed or based on the consumer price index. Any rent abatements, along with rent escalations, are included in the computation of rent expense calculated on a straight-line basis over the lease term. The lease term for most leases includes the initial non-cancelable term plus any term under renewal options that we believe are reasonably assured. On a regular basis, we rationalize our lease footprint. When we determine that we no longer need leased space, we may incur accelerated lease costs. Our accelerated lease costs in December 31, 2024, 2023 and 2022 were not material. For the years ended December 31, 2024, 2023 and 2022, our gross rental expense, including the accelerated lease costs discussed above, was $403 million, $417 million and $384 million, respectively. We also received sublease rental income for the years ended December 31, 2024, 2023 and 2022 of $13 million, $14 million and $14 million, respectively. Supplemental consolidated balance sheet information and other information related to leases is included below:
(1) Includes affiliate operating lease assets of $234 million and $311 million as of December 31, 2024 and 2023, respectively. (2) Includes current portion of affiliate operating lease liabilities of $113 million and $129 million as of December 31, 2024 and 2023, respectively. (3) Includes noncurrent portion of affiliate operating lease liabilities of $128 million and $201 million as of December 31, 2024 and 2023, respectively. Supplemental consolidated cash flow statement information related to leases is included below:
As of December 31, 2024, maturities of lease liabilities were as follows:
As of December 31, 2024, we had no material operating or finance leases that had not yet commenced. Operating Lease Revenue We lease various dark fiber and conduit, office facilities and colocation facilities to third parties under operating leases. Lease and sublease income are included in operating revenue in the consolidated statements of operations. See "Revenue Recognition" in Note 1—Background and Summary of Significant Accounting Policies. For the years ended December 31, 2024, 2023 and 2022 our was $694 million, $676 million and $746 million, respectively, which represents 11% of our operating revenue for year ended December 31, 2024 and 10% of our operating revenue for each of the years ended December 31, 2023 and 2022.
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Credit Losses on Financial Instruments |
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| Credit Losses on Financial Instruments | Note 6—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 for our accounts receivable portfolio:
______________________________________________________________________ (1) Represents changes in amounts classified as held for sale related to the divestitures of our Latin American and EMEA businesses prior to the divestitures on August 1, 2022 and November 1, 2023, respectively. See Note 2—Divestitures of the Latin American and EMEA Businesses.
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Long-Term Debt |
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| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Long-Term Debt | Note 7—Long-Term Debt The following table reflects our consolidated long-term debt, including finance leases and other obligations, unamortized discounts and premiums, net and unamortized debt issuance costs, but excluding intercompany debt:
_______________________________________________________________________________ N/A - Not applicable (1)As of December 31, 2024. All references to "SOFR" refer to the Secured Overnight Financing Rate. (2)As discussed further below in this Note, the debt listed under the caption “Senior Secured Debt” is secured by assets of Level 3 Financing and guaranteed on a secured basis by certain of its affiliates. As discussed further in footnote 6, we reclassified in the "December 31, 2024" column of the table above certain notes that were secured prior to the TSA Effective Date (as defined below) from "secured" to "unsecured" in light of amendments that released such prior security interests. (3)The Term Loan B-1 and B-2 each had an interest rate of 11.133% as of December 31, 2024. (4)Reflects Level 3 Tranche B 2027 Term Loan issued under a predecessor facility, which had an interest rate of 6.437% and 7.220% as of December 31, 2024 and December 31, 2023, respectively. (5)Includes Level 3 Financing's 10.500% Senior Secured Notes due 2030 issued in early 2023, the terms of which have been amended to be consistent with Level 3 Financing's First Lien Notes issued on March 22, 2024. (6)Two series of former Level 3 Senior Notes due in 2027 and 2029 bearing interest rates of 3.400% and 3.875% as of December 31, 2023, were amended on the TSA Effective Date in the manner discussed in Note 7—Long-Term Debt. (7)The total debt for these notes at December 31, 2024 includes the remaining aggregate principal amount due under Level 3 Financing's Former Secured Notes, the terms of which were amended on March 22, 2024 to release the security interests relating thereto. Long-Term Debt Maturities Set forth below is the aggregate principal amount of our long-term debt as of December 31, 2024 (excluding unamortized (discounts) premiums, net, unamortized debt issuance costs and intercompany debt) maturing during the following years:
2024 Debt Transactions Cash Tender Offers Pursuant to cash tender offers that commenced on November 12, 2024 (the "Cash Tender Offers"), in November 2024 we reduced the aggregate principal amount of our consolidated indebtedness by approximately $324 million. In conjunction with the Cash Tender Offers, we recorded a gain of $31 million including an offset of immaterial third-party fees in our aggregate Net gain on early retirement of debt in Other income, net in our consolidated statement of operations for the year ended December 31, 2024. The following table sets forth the aggregate principal amount of each series of senior notes retired in exchange for cash in November 2024 in connection with the Cash Tender Offers:
Exchange Offers Pursuant to exchange offers that commenced on September 3, 2024 (the "Exchange Offers"), on September 24, 2024, Level 3 Financing issued approximately $350 million aggregate principal amount of its newly-issued 10.000% Second Lien Notes due 2032 in exchange for $357 million aggregate principal amount of two series of its outstanding senior unsecured notes maturing in 2027 (which were concurrently cancelled). These transactions reduced the aggregate principal amount of Level 3 Financing's consolidated indebtedness by approximately $7 million. The Company determined that the Exchange Offers constituted a debt modification consistent with ASC 470 and recorded no gain or loss. In conjunction with the Exchange Offers, we recorded $8 million of fees to Selling, general and administrative expense in our consolidated statements of operations for the year ended December 31, 2024. The following table sets forth the aggregate principal amount of each series of senior unsecured notes of Level 3 Financing exchanged and retired on September 24, 2024 in connection with the Exchange Offers:
Transaction Support Agreement Transactions On March 22, 2024, the TSA Parties completed the TSA Transactions, including the termination, repayment or exchange of previous commitments and debt of Level 3 Financing and the issuance of new term loan facilities and notes by Level 3 Financing. The following table sets forth the aggregate principal amount of (i) former debt of Level 3 Financing exchanged for new Level 3 Financing debt and (ii) new debt issued by Level 3 in exchange for former Level 3 debt (except as otherwise noted), in each case during the first quarter of 2024 in connection with the TSA Transactions:
______________________________________________________________________ N/A - Not applicable (1)See our long-term debt table above for information on the amount of former debt that remains outstanding as of December 31, 2024. In evaluating the terms of the TSA Transactions, we determined that for certain of our creditors the new debt instruments were substantially different than pre-existing debt and therefore constituted a non-cash extinguishment of old debt of $2.6 billion and the establishment of new debt for which we recorded a gain on extinguishment in the first quarter of 2024. This new debt was recorded at fair value generating a reduction to debt of $261 million which resulted in a net gain of $54 million, and is included in our aggregate Net gain on early retirement of debt in Other income, net in our consolidated statement of operations for the year ended December 31, 2024. The remaining creditors’ debt was not substantially different under the terms of the TSA Transactions and was treated under modification accounting rules. In conjunction with the TSA Transactions, we paid $209 million in lender fees and $112 million in additional third-party costs. Of these amounts, we offset $157 million of lender fees against the gain on extinguishment and recorded $61 million in third-party costs to Selling, general and administrative expense in our consolidated statement of operations for the year ended December 31, 2024. In accordance with GAAP provisions for modification and extinguishment accounting, $52 million in lender fees and $51 million in third-party costs, respectively, were capitalized and will be amortized over the terms of the newly-issued indebtedness. Repurchases of Debt Instruments During 2024, Level 3 Financing repurchased various debt instruments on the open market. These repurchases resulted in an aggregate net gain of $34 million which is included in our aggregate Net gain on early retirement of debt in Other income, net in our consolidated statement of operations for the year ended December 31, 2024. The following table sets forth the aggregate principal amount of each series of notes repurchased during the year ended December 31, 2024:
2023 Debt Modification Transactions Pursuant to exchange offers that commenced on March 16, 2023 (the “2023 Exchange Offers”), on March 31, 2023, Level 3 Financing issued $915 million of its 10.500% Senior Secured Notes due 2030 (the “10.500% Notes”) in exchange for $1.535 billion of Lumen’s outstanding senior unsecured notes. On April 17, 2023, in connection with the 2023 Exchange Offers, Level 3 Financing issued an additional $9 million of its 10.500% Notes in exchange for $19 million of Lumen's outstanding senior unsecured notes. Level 3 Financing Credit Agreements Credit Agreement dated March 22, 2024 On the TSA effective date, Level 3 Financing, as borrower, Level 3 Parent, the lenders party thereto and Wilmington Trust, National Association, as administrative agent and collateral agent, entered into a credit agreement (the "New Level 3 Agreement"), providing for: • a secured term B-1 loan facility in the principal amount of approximately $1.2 billion maturing April 15, 2029; and •a secured term B-2 loan facility in the principal amount of approximately $1.2 billion maturing April 15, 2030 Interest on borrowings under the New Level 3 Agreement is payable at the end of each interest period at a rate equal to, at Level 3 Financing’s option, term SOFR (subject to a 2.000% floor) plus 6.56% for term SOFR loans or a base rate plus 5.56% for base rate loans. Amounts outstanding under the New Level 3 Agreement may be prepaid at any time, subject to a premium of (i) 2.00% of the aggregate principal amount if prepaid on or prior to the 12-month anniversary of the TSA Effective Date and (ii) 1.00% of the aggregate principal amount if prepaid after the 12-month anniversary of the TSA Effective Date and on or prior to the 24-month anniversary of the TSA Effective Date. The New Level 3 Facilities require Level 3 to make certain specified mandatory prepayments upon the occurrence of certain transactions. Former Facility In connection with entering into the New Level 3 Agreement, substantially all of the indebtedness issued under Level 3 Financing’s amended and restated credit agreement dated as of November 29, 2019 (the “Former Level 3 Facility”) was repaid. Level 3 Guarantees of Lumen Credit Agreements Lumen’s obligations under its Superpriority Revolving/Term A Credit Agreement dated as of March 22, 2024 (the “RCF/TLA Credit Agreement”) are unsecured, but Level 3 Parent, Level 3 Financing and certain of Level 3 Financing's subsidiaries (collectively, the "Level 3 Collateral Guarantors") have provided an unconditional guarantee of payment of up to $150 million of Lumen’s obligations under both of the revolving credit facilities created under the RCF/TLA Credit Agreement. Certain of such guarantees will be secured by a lien on substantially all of the assets of the applicable Level 3 Collateral Guarantors. The guarantee by the Level 3 Collateral Guarantors may be reduced or terminated under certain circumstances. Senior Notes The Company’s consolidated indebtedness at December 31, 2024 included (i) first and second lien secured notes issued by Level 3 Financing and (ii) senior unsecured notes issued by Level 3 Financing. All of these notes carry fixed interest rates and all principal is due on the notes’ respective maturity dates, which rates and maturity dates are summarized in the table above. Level 3 Financing generally can redeem the notes, at its option, in whole or in part, (i) pursuant to a fixed schedule of pre-established redemption prices, (ii) pursuant to a “make whole” redemption price or (iii) under certain other specified limited conditions. Letters of Credit It is customary for us to use various financial instruments in the normal course of business. These instruments include letters of credit. Letters of credit are conditional commitments issued on our behalf in accordance with specified terms and conditions. As of December 31, 2024 and 2023, we had outstanding letters of credit or other similar obligations of approximately $2 million, all of which were collateralized by restricted cash in each year. None of our conditional commitments under our outstanding letters of credit are reflected as debt on our balance sheets. Certain Guarantees and Security Interests Level 3 Financing’s obligations under the New Level 3 Agreement are secured by a first lien on substantially all of its assets. In addition, the other Level 3 Collateral Guarantors have provided an unconditional guarantee of payment of Level 3 Financing’s obligations under the New Level 3 Agreement secured by a lien on substantially all of their assets. Level 3 Financing’s obligations under its first lien notes are secured by a first lien on substantially all of its assets (subject, in certain cases, to receipt of necessary regulatory approvals), and are guaranteed by the other Level 3 Collateral Guarantors (or, for certain such guarantors, for certain notes will be guaranteed upon the receipt of required regulatory approvals) on the same basis as the guarantees provided by such entities under the New Level 3 Agreement. Level 3 Financing’s obligations under its second lien notes are secured by a second lien on substantially all of its assets, and are guaranteed by the other Level 3 Collateral Guarantors on the same basis as the guarantees provided by such entities under the New Level 3 Agreement, except the lien securing such guarantees is a second lien. Level 3 Financing's obligations under its unsecured notes are guaranteed on an unsecured basis by the same affiliated entities that guarantee the New Level 3 Agreement and secured notes. Supplier Finance Program Pursuant to our purchase of network equipment under a supplier finance program implemented in 2021 with one of our key equipment vendors, we are obligated to make quarterly installment payments over a five-year period and pay annual interest of 1.25% on unpaid balances. The first unsecured quarterly payment was due April 27, 2022, with remaining quarterly payments due through the end of the term on July 1, 2026. The supplier also agreed to certain milestone performance and other provisions that could result in us earning credits to be applied by us towards future equipment purchases. As of December 31, 2024 and 2023, we have received approximately $24 million and $15 million of credits, respectively. Changes in our were as follows:
As of December 31, 2024 and 2023, $21 million and $16 million were included in and $18 million and $39 million were included in . Interest Expense Interest expense includes interest on total long-term debt. The following table presents the amount of gross interest expense, net of capitalized interest:
______________________________________________________________________ (1) The increase in interest expense for the year ended December 31, 2024 was primarily driven by an increase in average outstanding long-term debt of approximately $780 million. Covenants The New Level 3 Agreement and Level 3 Financing's first and second lien secured notes contain various representations and extensive affirmative and negative covenants. Such covenants include, among other things and subject to certain significant exceptions, restrictions on their ability to declare or pay dividends, repay certain other indebtedness, create liens, incur additional indebtedness, make investments, dispose of assets and merge or consolidate with any other person. Also, under certain circumstances in connection with a “change of control” of Level 3 Parent or Level 3 Financing, Level 3 Financing will be required to make an offer to repurchase each series of its outstanding senior notes at a price of 101% of the principal amount redeemed, plus accrued and unpaid interest. The debt covenants applicable to Level 3 Financing and its subsidiaries could have a material adverse impact on their ability to operate or expand their respective businesses, to pursue strategic transactions, or to otherwise pursue their plans and strategies. Certain of Lumen's and our debt instruments contain cross payment default or cross acceleration provisions. When present, these provisions could have a wider impact on liquidity than might otherwise arise from a default or acceleration of a single debt instrument. The ability of Level 3 Financing and its subsidiaries to comply with the covenants in its debt instruments could be adversely impacted by a wide variety of events, including unforeseen contingencies, many of which are beyond its control. Compliance As of December 31, 2024, we believe we were in compliance with the provisions and financial covenants contained in our debt agreements in all material respects. Subsequent Events As of February 15, 2025, Level 3 Financing redeemed approximately $70 million aggregate principal amount of its unsecured senior notes in exchange for cash.
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Accounts Receivable |
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| Accounts Receivable | Note 8—Accounts Receivable The following table presents details of our accounts receivable balances:
We are exposed to concentrations of credit risk from our customers and other telecommunications service providers. We generally do not require collateral to secure our receivable balances.
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| Property, Plant and Equipment | Note 9— Property, Plant and Equipment Net property, plant and equipment is composed of the following:
_______________________________________________________________________________ (1)Fiber, conduit and other outside plant consists of fiber and metallic cable, conduit, poles and other supporting structures. (2)Central office and other network electronics consists of circuit and packet switches, routers, transmission electronics and electronics providing service to customers. (3)Support assets consist of buildings, data centers, computers and other administrative and support equipment. (4)Construction in progress includes construction and property of the aforementioned categories that has not been placed in service as it is still under construction. Depreciation expense was $676 million, $686 million and $790 million for the years ended December 31, 2024, 2023 and 2022, respectively. During 2024, we initiated marketing our Broomfield, Colorado office buildings to locate a buyer and have classified those buildings as held for sale resulting in an impairment loss of $80 million. Asset Retirement Obligations As of December 31, 2024 and 2023, our asset retirement obligations consisted primarily of restoration requirements for leased facilities. We recognize our estimate of the fair value of our asset retirement obligations in the period incurred in other long-term liabilities. The fair value of the asset retirement obligation is also capitalized as property, plant and equipment and then depreciated over the estimated remaining useful life of the associated asset. The following table provides asset retirement obligation activity:
The change in estimate referred to in the table above was offset against gross property, plant and equipment.
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Severance |
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| Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Severance | Note 10— Severance Periodically, we reduce our workforce and accrue liabilities for the related severance costs. These workforce reductions result primarily from the progression or completion of our post-acquisition integration plans, increased competitive pressures, cost reduction initiatives, process improvements through automation and reduced workloads due to reduced demand for certain services. During April 2024, we reduced our workforce by approximately 7% as a part of our efforts to change our workforce composition to reflect our ongoing transformation and cost reduction opportunities that align with our shapeshifting and focus on our strategic priorities. As a result of this plan, we incurred severance and related costs of approximately $37 million. We have not incurred, and do not expect to incur, any material impairment or exit costs related to this plan. We report severance liabilities within accrued expenses and other liabilities - salaries and benefits in our consolidated balance sheets and report severance expenses in in our consolidated statements of operations. Changes in our accrued liabilities for severance expenses were as follows:
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Employee Benefits |
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Dec. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Employee Benefits | Note 11—Employee Benefits Defined Contribution Plans Lumen Technologies sponsors a qualified defined contribution plan covering substantially all of our employees. Under this plan, employees may contribute a percentage of their annual compensation up to certain maximums, as defined by the plan and by the Internal Revenue Service ("IRS"). Currently, we match a percentage of our employee's contributions in cash. For the years ended December 31, 2024, 2023 and 2022, we recognized $30 million, $32 million, and $31 million, respectively, in expense related to this plan. Defined Benefit Plans We have certain contributory and non-contributory employee pension plans, which are not significant to our financial position or operating results. We recognize in our balance sheet the funded status of our qualified defined benefit post-retirement plan, which is measured as the difference between the fair value of the plan assets and the plan benefit obligations. We are also required to recognize changes in the funded status within accumulated other comprehensive income, net of tax, to the extent such changes are not recognized in earnings as components of periodic net benefit cost. The following table presents the funded status of our defined benefit plans as of December 31, 2024 and 2023:
The plans were fully funded as of December 31, 2024 and December 31, 2023.
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Fair Value of Financial Instruments |
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| Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair Value of Financial Instruments | Note 12—Fair Value of Financial Instruments Our financial instruments consist of cash and cash equivalents, restricted cash, accounts receivable, accounts payable, note receivable-affiliate and long-term debt (excluding finance leases and other obligations) and certain indemnification obligations. Due to their short-term nature, the carrying amounts of our cash and cash equivalents, restricted cash, accounts receivable, note receivable-affiliate and accounts payable 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 used following the fair value hierarchy. We determined the fair values of our long-term debt, including the current portion, based primarily 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 are generally as follows:
The following table presents the carrying amounts and estimated fair values of our financial liabilities as of December 31, 2024 and 2023, as well as the input level used to determine the fair values indicated below:
_______________________________________________________________________________ (1)Non-recurring fair value recorded in connection with the sale of our Latin American business was measured as of August 1, 2022. See Note 2—Divestitures of the Latin American and EMEA Businesses for further details.
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Income Taxes |
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| Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income Taxes | Note 13—Income Taxes The components of the income tax (benefit) expense are as follows:
Income tax (benefit) expense was allocated as follows:
The following is a reconciliation from the statutory federal income tax rate to our effective income tax rate:
_______________________________________________________________________________ (1)Includes Global Intangible Low-Taxes Income ("GILTI") incurred as a result of the sale of our Latin American business. For the year ended December 31, 2024, the effective tax rate was 11.3% compared to 0.1% and (5.6)% for the years ended December 31, 2023 and 2022, respectively. The effective tax rate for the year ended December 31, 2023 includes a $389 million of a non-deductible goodwill impairment charge recorded in the second quarter of 2023. The effective tax rate for the year ended December 31, 2022 includes a $969 million unfavorable impact of non-deductible goodwill impairment and a $256 million unfavorable impact related to incurring GILTI as a result of the sale of our Latin American business. The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and deferred tax liabilities were as follows:
Of the $283 million and $336 million net deferred tax liabilities as of December 31, 2024 and 2023, respectively, $337 million and $375 million is reflected as a long-term liability, in other on our consolidated balance sheets and $54 million and $39 million is reflected as a net noncurrent deferred tax asset, in other, net on our consolidated balance sheets. As of December 31, 2024, we had gross federal NOLs net of uncertain tax positions of $5.1 billion, which will expire between 2025 and 2037 if unused, and state NOLs net of uncertain tax positions of $5.1 billion. Our deferred tax asset balance is based on our historical balance and subsequent standalone activity since we were acquired by Lumen in 2017 and does not correspond to the amount of NOLs that are available for use by Lumen. We establish valuation allowances when necessary to reduce the deferred tax assets to amounts we expect to realize. As of December 31, 2024, a valuation allowance of $126 million was recorded as it is more likely than not that this amount of NOL and tax credit carryforwards will not be utilized prior to expiration. Our valuation allowance as of December 31, 2024 is primarily related to state NOL carryforwards. As of December 31, 2023, our valuation allowance is primarily related to federal capital loss carryforwards and state NOL carryforwards. A reconciliation of the change in our gross unrecognized tax benefits (excluding both interest and any related federal benefit) for the years ended December 31, 2024 and 2023 is as follows:
As of December 31, 2024 the total amount of unrecognized tax benefits that, if recognized, would impact the effective income tax rate was $3 million. The unrecognized tax benefits also includes tax positions that, if recognized, would result in adjustments to other tax accounts, primarily deferred taxes, that would not impact the effective tax rate but could impact cash tax amounts payable to taxing authorities. Our policy is to reflect interest expense associated with unrecognized tax benefits in income tax expense. We had accrued interest (presented before related tax benefits) of approximately $1 million as of December 31, 2024 and 2023. We, or at least one of our affiliates, file income tax returns in the U.S. federal jurisdiction and various states and foreign jurisdictions. With few exceptions, we are no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years before 2004. The Internal Revenue Service and state and local taxing authorities reserve the right to audit any period where NOL carry forwards are available. Based on our current assessment of various factors, including (i) the potential outcomes of these ongoing examinations, (ii) the expiration of statute of limitations for specific jurisdictions, (iii) the negotiated settlement of certain disputed issues, and (iv) the administrative practices of applicable taxing jurisdictions, it is reasonably possible that the related unrecognized tax benefits for uncertain tax positions previously taken may decrease by up to $7 million within the next 12 months. The actual amount of such decrease, if any, will depend on several future developments and events, many of which are outside our control. In August 2022, the Inflation Reduction Act was signed into law and which, among other things, implemented a corporate alternative minimum tax (“CAMT”) on adjusted financial statement income effective for tax periods occurring after December 31, 2022. The CAMT had no material impact on our financial results as of December 31, 2024. In addition, in 2021 the Organization for Economic Co-operation and Development ("OECD") issued Pillar Two model rules introducing a new global minimum corporate tax of 15% and the OECD and the majority of its participating countries continue to work toward the enactment of such tax. While the US has not yet adopted the Pillar Two rules, various other governments around the world have enacted such legislation that is effective for tax periods after December 31, 2023. These global minimum tax rules have increased our administrative and compliance burdens, but the impact to our financial statements for the year ended December 31, 2024 was immaterial. We anticipate further legislative activity and administrative guidance throughout 2025 and continue to monitor evolving global tax legislation.
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Geographic and Customer Concentrations |
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| Revenues [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Geographic and Customer Concentrations | Note 14—Geographic and Customer Concentrations For the years ended December 31, 2024 and 2023, all of our assets were in North America. The table below shows our operating revenue for the years ended December 31, 2024, 2023 and 2022 by geographic region:
_______________________________________________________________________________ (1)Includes revenue prior to closing the sale of the Latin American business on August 1, 2022, revenue recognized through post-closing commercial agreements subsequent to the sale and revenue related to servicing our customers in those regions. (2)Includes revenue prior to closing the sale of the EMEA business on November 1, 2023. A relatively small number of customers account for a significant percentage of our revenue. Our top ten customers accounted for approximately 20%, 18% and 15% of our total operating revenue for the years ended December 31, 2024, 2023 and 2022, respectively.
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Affiliate Transactions |
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Dec. 31, 2024 | |
| Related Party Transactions [Abstract] | |
| Affiliate Transactions | Note 15—Affiliate Transactions We provide competitive local exchange carrier telecommunications services to our affiliates that we also provide to external customers. We periodically review and update our prices for affiliate network services to align with competitive non-regulated market-based rates charged to external customers, taking into consideration the average third-party customer contract term to which those affiliate services pertain. These services are billed directly to our affiliates and recognized as affiliate revenue on our consolidated statements of operations. Whenever possible, costs are incurred directly by our affiliates for the services they use. When such costs are not directly incurred, they are allocated among all affiliates based upon the most reasonable method, first using cost causative measures, or, if no cost causative measure is available, using a general allocator. Unlike certain other affiliates of Lumen, we do not operate as a shared service company to our affiliates and therefore any allocated affiliate revenue we earn reduces the affiliate charges incurred by us and is presented on a net basis within Operating expenses – affiliates on our consolidated statements of operations. From time to time, we may adjust the basis for allocating the costs of a shared service among affiliates. Any such changes in allocation methodologies are generally applied prospectively. 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 those services using the allocation methodologies described above. On March 22, 2024, we entered into a $1.2 billion secured revolving credit facility with Lumen Technologies with an 11% interest rate per annum. The principal amount is payable upon demand by us and prepayable by Lumen Technologies at any time, but no later than May 31, 2030, which maturity date may be extended for two additional one-year periods. The facility has covenants and is subject to other limitations, including a collateral agreement. On March 22, 2024, we amended and restated our unsecured credit facility with Lumen Technologies pursuant to which Lumen Technologies may borrow up to $1.825 billion from us. As of December 31, 2024, the interest rate was 11.03% and is subject to certain adjustments as set forth in the facility (SOFR + 6%). The principal amount is payable upon demand by us and prepayable by Lumen Technologies at any time prior to maturity. The facility has covenants and is subject to other limitations. On September 24, 2024, we further amended and restated this facility to extend the maturity date to November 30, 2032, which may be extended for two additional one-year periods. As of December 31, 2024, Lumen Technologies owed us approximately $2.7 billion, of which $1.2 billion was due under the above-mentioned secured revolving credit facility and approximately $1.5 billion was due under the above-mentioned unsecured revolving credit facility. As of December 31, 2023, Lumen Technologies owed us approximately $1.5 billion under the above-mentioned revolving credit facility. In the first quarter of 2024, we made a distribution of cash to Lumen Technologies in the amount of approximately $1.8 billion, thereby reducing equity by the same amount, which was partially offset by a contribution from Lumen Technologies of $210 million, thereby increasing equity by the same amount. In the fourth quarter of 2024, we made a non-cash distribution to Lumen Technologies in exchange for a reduction in advances to affiliates of $200 million, in addition to a cash distribution of an additional $1.4 billion.
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Commitments, Contingencies and Other Items |
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| Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commitments, Contingencies and Other Items | Note 16—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. 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 December 31, 2024 and December 31, 2023, we had accrued $36 million and $38 million, respectively, in the aggregate for our litigation and non-income tax contingencies which is included in Other under Current Liabilities or Other under Deferred Revenue and Other Liabilities in our consolidated balance sheets as of such date. We cannot at this time estimate the reasonably possible loss or range of loss, if any, in excess of our $36 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. Latin American Tax Litigation and Claims In connection with the 2022 divestiture of our Latin American business, the purchaser assumed responsibility for the Brazilian tax claims described in our prior periodic reports filed with the SEC. We agreed to indemnify the purchaser for amounts paid with respect to the Brazilian tax claims. The value of this indemnification and others associated with the Latin American business divestiture are included in the indemnification amount as disclosed in Note 12—Fair Value of Financial Instruments. Huawei Network Deployment Investigations Level 3 has received requests from the following federal agencies for information relating to the use of equipment manufactured by Huawei Technologies Company ("Huawei") in Lumen’s networks. •DOJ. Lumen has received a civil investigative demand from the U.S. Department of Justice in the course of a False Claims Act investigation alleging that Lumen Technologies, Inc. and Lumen Technologies Government Solutions, Inc. failed to comply with certain specified requirements in federal contracts concerning their use of Huawei equipment. •FCC. The FCC’s Enforcement Bureau issued a Letter of Inquiry to Lumen Technologies, Inc. regarding its written certifications to the FCC that Lumen has complied with FCC rules governing the use of resources derived from the High Cost Program, Lifeline Program, Rural Health Care Program, E-Rate Program, Emergency Broadband Benefit Program, and the Affordable Connectivity Program. Under these programs, federal funds may not be used to facilitate the deployment or maintenance of equipment or services provided by Huawei, a company that the FCC has determined poses a national security threat to the integrity of U.S. communications networks or the communications supply chain. •Team Telecom. The Committee for the Assessment of Foreign Participation in the United States Telecommunications Service Sector (comprised of the U.S. Attorney General, and the Secretaries of the Department of Homeland Security, and the Department of Defense), commonly referred to as Team Telecom, issued questions and requests for information relating to Lumen’s FCC licenses and its use of Huawei equipment. 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, tax issues, or environmental law issues, grievance hearings before labor regulatory agencies, miscellaneous third-party tort actions, or commercial disputes. We are currently defending several patent infringement lawsuits asserted against us by non-practicing entities 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. We are subject to various foreign, 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 operated certain manufacturing companies in the first part of the 1900s. Under applicable environmental laws, we could be named as a potentially responsible party for a share of the remediation of environmental conditions arising from the historical operations of our predecessors. The outcomes of these other proceedings described under this heading are 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. 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 we currently consider immaterial may ultimately affect us materially. Right-of-Way At December 31, 2024, our future rental commitments and Right-of-Way ("ROW") agreements were as follows:
Purchase Commitments We have several commitments to a variety of vendors for services to be used in the ordinary course of business totaling $205 million as of December 31, 2024. Of this amount, we expect to purchase $70 million in 2025, $68 million in 2026 through 2027, $25 million in 2028 through 2029 and $42 million in 2030 and thereafter. These amounts do not represent our entire anticipated purchases in the future, but represent only those items for which we are the contractually committed party as of December 31, 2024. In addition to our above-described contractual obligations, our ultimate parent company Lumen Technologies is contractually committed to purchase additional services under arrangements from which we may purchase in the future.
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Accumulated Other Comprehensive Income (Loss) |
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| Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accumulated Other Comprehensive Income (Loss) | Note 17—Accumulated Other Comprehensive Income (Loss) The table below summarizes changes in accumulated other comprehensive loss recorded on our consolidated balance sheet by component for the years ended December 31, 2024 and 2023:
The table below presents further information about our reclassifications out of accumulated other comprehensive (loss) income by component for the year ended December 31, 2023:
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Other Financial Information |
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| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other Financial Information | Note 18—Other Financial Information Other Current Assets The following table presents details of other current assets reflected in our consolidated balance sheets:
Other Current Liabilities Included in accounts payable at December 31, 2024 and 2023 were $106 million and $94 million, respectively, associated with capital expenditures.
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Pay vs Performance Disclosure - USD ($) $ in Millions |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2024 |
Dec. 31, 2023 |
Dec. 31, 2022 |
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| Pay vs Performance Disclosure | |||
| NET LOSS | $ (276) | $ (2,004) | $ (4,793) |
Insider Trading Arrangements |
3 Months Ended |
|---|---|
Dec. 31, 2024 | |
| Trading Arrangements, by Individual | |
| Rule 10b5-1 Arrangement Adopted | false |
| Non-Rule 10b5-1 Arrangement Adopted | false |
| Rule 10b5-1 Arrangement Terminated | false |
| Non-Rule 10b5-1 Arrangement Terminated | false |
Cybersecurity Risk Management and Strategy Disclosure |
12 Months Ended |
|---|---|
Dec. 31, 2024 | |
| Cybersecurity Risk Management, Strategy, and Governance [Line Items] | |
| Cybersecurity Risk Management Processes for Assessing, Identifying, and Managing Threats [Text Block] | As a technology and communications company that globally transmits large amounts of information over our networks, we recognize the critical importance of maintaining the security and integrity of information and systems under our control. We view cybersecurity risk as one of our principal enterprise-wide risks, subject to control and monitoring at various levels of management throughout the Company. We dedicate significant resources towards programs designed to identify, assess, manage, mitigate and respond to cybersecurity threats. As described in Item 1A “Risk Factors,” several features of our operations heighten our susceptibility to cyber-attacks, including (i) our material reliance on systems owned, operated or controlled by unaffiliated third-party operators and (ii) our processing and storage of large amounts of sensitive customer data. Cyber-attacks on our systems may be initiated by a wide variety of intruders, including employees, cyber-criminals, nation state actors and other advanced persistent threat actors, and may include attempts by outside parties to gain access to sensitive data that is stored in or transmitted across our network. Cyber-attacks can take many forms, including computer hackings, computer viruses, ransomware, worms or other destructive or disruptive software, denial of service attacks, or other malicious activities. To identify, assess and mitigate cybersecurity risk, we have implemented a global information security management program that includes administrative, technical, and physical safeguards. This program seeks to identify, detect, protect and respond to threats to our information systems. Our security operations center provides advanced threat detection and response capabilities. Lumen maintains an insider threat program to detect, investigate and mitigate insider threat risks to Lumen assets, data, services and personnel globally. Our cybersecurity and privacy policies encompass information security, incident response procedures, and vendor management. Our risk management team works closely with our information technology, privacy, product, and operations departments to continuously evaluate emerging cyber risk. We monitor existing or proposed cybersecurity and privacy laws, regulations and guidance that are or may be applicable to us in the regions where we operate, including in the European Union and the United Kingdom where we are subject to the General Data Protections Regulations ("GDPR"), as well as various other laws governing privacy rights, data protection and cybersecurity in other regions. As a U.S. government contractor we are required to comply with extensive governmental regulations and standards regarding cyber security. Lumen periodically engage both internal and external auditors and consultants to assess and enhance our program. These independent external auditors and consultants are accredited under various information security standards, including those administered by the International Organization for Standardization and the PCI Security Standards Council. These engagements typically include penetration testing, third-party certifications, compliance assessments, audits, and assessments of vulnerabilities and emerging threats. We also periodically deploy our Internal Audit processes to conduct additional reviews and assessments. We also mutually exchange threat intelligence with government agencies, cyber analysis centers and cybersecurity associations. As noted elsewhere in this annual report, we are materially reliant on a variety of third-party service providers to operate our business, which exposes us to the risk of cyber incidents impacting those providers’ systems. We have a vendor risk management program that assesses, manages and oversees risks associated with third-party service providers who have access to our data and systems. We maintain ongoing monitoring to ensure their compliance with our cybersecurity standards. Despite our efforts to prevent security incidents, (i) some of these attacks have resulted in security incidents (although thus far we do not believe that any of these incidents has resulted in a material adverse effect on our operating results or financial condition) and (ii) future security incidents are likely (some of which could have a material adverse effect on our operating results or financial condition). See Item 1A “Risk Factors” for a further discussion of cybersecurity risks. Lumen maintains an Incident Response Playbook that provides a set of guidelines for our stakeholders to follow when handling any data incident. This Playbook describes how we assess incidents and how our security team shares information about such incidents with others at Lumen, including senior leadership and, if warranted, with some or all members of its Board of Directors. These escalation provisions, together with Lumen's Disclosure Controls and Procedures, are designed to ensure that appropriate representatives throughout the Company are available to assess how to respond to such incidents and make any necessary public notifications. Our Cybersecurity Incident Response Team (“CIRT”) is responsible for detecting and coordinating responses to security incidents. This team regularly assesses its communication plan to confirm that its members can be alerted quickly in the event of an actual crisis and meet as a team to discuss response options. The CIRT also addresses each incident, unless it determines that an incident is sufficiently serious. In those instances, it will notify our Cyber Security Watch Team, which is responsible for addressing cybersecurity incidents that raise more significant risks. Our Cyber Security Watch Team (“CSWAT”) is comprised of senior IT, operations, risk, legal and compliance leaders across business segments. In addition to addressing our more significant cyber incidents, the CSWAT manages risks from matters related to business continuity, including risks posed by cybersecurity threats, and implements controls to mitigate such operational risks. Among other processes, this team reviews the our programs and processes related to information security, third-party risk, vendor management, facilities, unplanned downtime, business disruption, business continuity and disaster recovery.
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| Cybersecurity Risk Management Processes Integrated [Flag] | true |
| Cybersecurity Risk Management Processes Integrated [Text Block] | As a technology and communications company that globally transmits large amounts of information over our networks, we recognize the critical importance of maintaining the security and integrity of information and systems under our control. We view cybersecurity risk as one of our principal enterprise-wide risks, subject to control and monitoring at various levels of management throughout the Company. We dedicate significant resources towards programs designed to identify, assess, manage, mitigate and respond to cybersecurity threats. As described in Item 1A “Risk Factors,” several features of our operations heighten our susceptibility to cyber-attacks, including (i) our material reliance on systems owned, operated or controlled by unaffiliated third-party operators and (ii) our processing and storage of large amounts of sensitive customer data. Cyber-attacks on our systems may be initiated by a wide variety of intruders, including employees, cyber-criminals, nation state actors and other advanced persistent threat actors, and may include attempts by outside parties to gain access to sensitive data that is stored in or transmitted across our network. Cyber-attacks can take many forms, including computer hackings, computer viruses, ransomware, worms or other destructive or disruptive software, denial of service attacks, or other malicious activities. To identify, assess and mitigate cybersecurity risk, we have implemented a global information security management program that includes administrative, technical, and physical safeguards. This program seeks to identify, detect, protect and respond to threats to our information systems. Our security operations center provides advanced threat detection and response capabilities. Lumen maintains an insider threat program to detect, investigate and mitigate insider threat risks to Lumen assets, data, services and personnel globally. Our cybersecurity and privacy policies encompass information security, incident response procedures, and vendor management. Our risk management team works closely with our information technology, privacy, product, and operations departments to continuously evaluate emerging cyber risk. We monitor existing or proposed cybersecurity and privacy laws, regulations and guidance that are or may be applicable to us in the regions where we operate, including in the European Union and the United Kingdom where we are subject to the General Data Protections Regulations ("GDPR"), as well as various other laws governing privacy rights, data protection and cybersecurity in other regions. As a U.S. government contractor we are required to comply with extensive governmental regulations and standards regarding cyber security.
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| Cybersecurity Risk Management Third Party Engaged [Flag] | true |
| Cybersecurity Risk Third Party Oversight and Identification Processes [Flag] | true |
| Cybersecurity Risk Materially Affected or Reasonably Likely to Materially Affect Registrant [Flag] | false |
| Cybersecurity Risk Board of Directors Oversight [Text Block] | As part of our overall risk management approach, Lumen prioritizes the identification and management of cybersecurity risk at several levels, including oversight by Lumen's Board of Directors, executive commitment and employee training. Lumen's Risk and Security Committee, comprised of independent directors from its Board, assists the Board in overseeing our cybersecurity and data privacy risk. Specifically, the Risk and Security Committee, which meets quarterly, (i) receives periodic reports from Lumen's Chief Security Officer (“CSO”) on security programs, including incident reports, (ii) reviews cybersecurity risk assessments from information security, privacy, and internal audit management teams, including the adequacy and effectiveness of the Company’s internal controls regarding cybersecurity; (iii) reviews emerging cybersecurity developments and threats; (iv) reviews compliance with applicable laws and industry standards; and (v) periodically reviews our strategy to mitigate cybersecurity risks, such as our cyber insurance coverage and contingency plans in the event of security incidents or other system disruptions. At least quarterly, the Risk and Security Committee provides reports to the full Board regarding matters recently discussed by the Committee, which enables the full Board of Directors to provide additional oversight of our cyber risks and cyber processes. The full Board also reviews our cybersecurity risks in connection with its annual review of our enterprise risk mitigation programs. Lumen's CSO has extensive experience working in the public and private sectors leading security organizations, risk management functions, and driving large information technology deployments. He has an Engineering degree, a Master of Business Administration, a Chief Information Security Officer Certification, and a Global Information Assurance Certification Security Leadership Certification. He oversees the implementation and compliance of our information security standards and mitigation of information security related risks.
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| Cybersecurity Risk Board Committee or Subcommittee Responsible for Oversight [Text Block] | Lumen's Risk and Security Committee, comprised of independent directors from its Board, assists the Board in overseeing our cybersecurity and data privacy risk. Specifically, the Risk and Security Committee, which meets quarterly, (i) receives periodic reports from Lumen's Chief Security Officer (“CSO”) on security programs, including incident reports, (ii) reviews cybersecurity risk assessments from information security, privacy, and internal audit management teams, including the adequacy and effectiveness of the Company’s internal controls regarding cybersecurity; (iii) reviews emerging cybersecurity developments and threats; (iv) reviews compliance with applicable laws and industry standards; and (v) periodically reviews our strategy to mitigate cybersecurity risks, such as our cyber insurance coverage and contingency plans in the event of security incidents or other system disruptions. At least quarterly, the Risk and Security Committee provides reports to the full Board regarding matters recently discussed by the Committee, which enables the full Board of Directors to provide additional oversight of our cyber risks and cyber processes. The full Board also reviews our cybersecurity risks in connection with its annual review of our enterprise risk mitigation programs. |
| Cybersecurity Risk Process for Informing Board Committee or Subcommittee Responsible for Oversight [Text Block] | Lumen's Risk and Security Committee, comprised of independent directors from its Board, assists the Board in overseeing our cybersecurity and data privacy risk. Specifically, the Risk and Security Committee, which meets quarterly, (i) receives periodic reports from Lumen's Chief Security Officer (“CSO”) on security programs, including incident reports, (ii) reviews cybersecurity risk assessments from information security, privacy, and internal audit management teams, including the adequacy and effectiveness of the Company’s internal controls regarding cybersecurity; (iii) reviews emerging cybersecurity developments and threats; (iv) reviews compliance with applicable laws and industry standards; and (v) periodically reviews our strategy to mitigate cybersecurity risks, such as our cyber insurance coverage and contingency plans in the event of security incidents or other system disruptions. At least quarterly, the Risk and Security Committee provides reports to the full Board regarding matters recently discussed by the Committee, which enables the full Board of Directors to provide additional oversight of our cyber risks and cyber processes. The full Board also reviews our cybersecurity risks in connection with its annual review of our enterprise risk mitigation programs. |
| Cybersecurity Risk Role of Management [Text Block] | Lumen's cybersecurity organization includes a response team and management-level committees who support our processes to assess and manage cybersecurity risk as follows: •At the day-to-day operational level, we maintain an experienced information security team who are tasked with implementing our privacy and cybersecurity program and support the CSO in implementing our detection, reporting, security and mitigation functions. This team and the CSO work to develop and implement tools and processes designed to assist in identifying, containing and remediating cybersecurity incidents, and periodically retain consultants to assist with these activities. We generally seek to promote a company-wide awareness of cybersecurity risk through broad-based communications and educational initiatives, including regularly conducting phishing tests and holding employee trainings on our privacy, cybersecurity and information management policies, at least annually and more frequently when legal or other developments warrant. •The Technology, Security, and Privacy Council, co-chaired by the CSO, the Chief Information Officer (CIO), and the Chief Privacy Officer (CPO), leverages the combined expertise of various security, IT, legal, internal audit, and operational leaders across the company. This council provides a forum for these cross-functional members of management of our leadership team to consider emerging technologies, such as artificial intelligence and emerging cybersecurity risks; review cybersecurity and privacy regulations; review and update policies and standards as appropriate; and promote cross-functional collaboration to manage cybersecurity and privacy risks across the enterprise. Members of this council are responsible for reporting on cybersecurity and privacy risks to the Risk Oversight Committee (“ROC”). •The ROC, whose core members include the CFO, Chief Technology Officer, Chief Product Officer, and Chief Legal Officer, oversees our company-wide risk mitigation strategies. With respect to cyber risks, the ROC's oversight function helps to ensure accountability, adequacy of resourcing, implementation of Company directives, and alignment of oversight provided by the Board of Directors and senior leadership team. Some of the more significant risks discussed by the ROC are also reported to Lumen's Security Committee at least quarterly.
|
| Cybersecurity Risk Management Positions or Committees Responsible [Flag] | true |
| Cybersecurity Risk Management Positions or Committees Responsible [Text Block] | As part of our overall risk management approach, Lumen prioritizes the identification and management of cybersecurity risk at several levels, including oversight by Lumen's Board of Directors, executive commitment and employee training. Lumen's Risk and Security Committee, comprised of independent directors from its Board, assists the Board in overseeing our cybersecurity and data privacy risk. Specifically, the Risk and Security Committee, which meets quarterly, (i) receives periodic reports from Lumen's Chief Security Officer (“CSO”) on security programs, including incident reports, (ii) reviews cybersecurity risk assessments from information security, privacy, and internal audit management teams, including the adequacy and effectiveness of the Company’s internal controls regarding cybersecurity; (iii) reviews emerging cybersecurity developments and threats; (iv) reviews compliance with applicable laws and industry standards; and (v) periodically reviews our strategy to mitigate cybersecurity risks, such as our cyber insurance coverage and contingency plans in the event of security incidents or other system disruptions. At least quarterly, the Risk and Security Committee provides reports to the full Board regarding matters recently discussed by the Committee, which enables the full Board of Directors to provide additional oversight of our cyber risks and cyber processes. The full Board also reviews our cybersecurity risks in connection with its annual review of our enterprise risk mitigation programs. Lumen's cybersecurity organization includes a response team and management-level committees who support our processes to assess and manage cybersecurity risk as follows: •At the day-to-day operational level, we maintain an experienced information security team who are tasked with implementing our privacy and cybersecurity program and support the CSO in implementing our detection, reporting, security and mitigation functions. This team and the CSO work to develop and implement tools and processes designed to assist in identifying, containing and remediating cybersecurity incidents, and periodically retain consultants to assist with these activities. We generally seek to promote a company-wide awareness of cybersecurity risk through broad-based communications and educational initiatives, including regularly conducting phishing tests and holding employee trainings on our privacy, cybersecurity and information management policies, at least annually and more frequently when legal or other developments warrant. •The Technology, Security, and Privacy Council, co-chaired by the CSO, the Chief Information Officer (CIO), and the Chief Privacy Officer (CPO), leverages the combined expertise of various security, IT, legal, internal audit, and operational leaders across the company. This council provides a forum for these cross-functional members of management of our leadership team to consider emerging technologies, such as artificial intelligence and emerging cybersecurity risks; review cybersecurity and privacy regulations; review and update policies and standards as appropriate; and promote cross-functional collaboration to manage cybersecurity and privacy risks across the enterprise. Members of this council are responsible for reporting on cybersecurity and privacy risks to the Risk Oversight Committee (“ROC”). •The ROC, whose core members include the CFO, Chief Technology Officer, Chief Product Officer, and Chief Legal Officer, oversees our company-wide risk mitigation strategies. With respect to cyber risks, the ROC's oversight function helps to ensure accountability, adequacy of resourcing, implementation of Company directives, and alignment of oversight provided by the Board of Directors and senior leadership team. Some of the more significant risks discussed by the ROC are also reported to Lumen's Security Committee at least quarterly.
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| Cybersecurity Risk Management Expertise of Management Responsible [Text Block] | Lumen's CSO has extensive experience working in the public and private sectors leading security organizations, risk management functions, and driving large information technology deployments. He has an Engineering degree, a Master of Business Administration, a Chief Information Security Officer Certification, and a Global Information Assurance Certification Security Leadership Certification. He oversees the implementation and compliance of our information security standards and mitigation of information security related risks. |
| Cybersecurity Risk Process for Informing Management or Committees Responsible [Text Block] | Lumen's Risk and Security Committee, comprised of independent directors from its Board, assists the Board in overseeing our cybersecurity and data privacy risk. Specifically, the Risk and Security Committee, which meets quarterly, (i) receives periodic reports from Lumen's Chief Security Officer (“CSO”) on security programs, including incident reports, (ii) reviews cybersecurity risk assessments from information security, privacy, and internal audit management teams, including the adequacy and effectiveness of the Company’s internal controls regarding cybersecurity; (iii) reviews emerging cybersecurity developments and threats; (iv) reviews compliance with applicable laws and industry standards; and (v) periodically reviews our strategy to mitigate cybersecurity risks, such as our cyber insurance coverage and contingency plans in the event of security incidents or other system disruptions. At least quarterly, the Risk and Security Committee provides reports to the full Board regarding matters recently discussed by the Committee, which enables the full Board of Directors to provide additional oversight of our cyber risks and cyber processes. The full Board also reviews our cybersecurity risks in connection with its annual review of our enterprise risk mitigation programs. |
| Cybersecurity Risk Management Positions or Committees Responsible Report to Board [Flag] | true |
Background and Summary of Significant Accounting Policies (Policies) |
12 Months Ended |
|---|---|
Dec. 31, 2024 | |
| Accounting Policies [Abstract] | |
| Basis of Presentation | Basis of Presentation The accompanying consolidated financial statements include our accounts and the accounts of our subsidiaries in which we have a controlling interest. 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.
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| Reclassification | We reclassified certain prior period amounts to conform to the current period presentation, including our revenue by product and service categories for 2023 and 2022. |
| Segments | Segments Our operations are integrated into and reported as part of Lumen Technologies' operations. Lumen's CEO is our chief operating decision maker ("CODM") and reviews our financial information on an aggregate basis only in connection with our quarterly and annual reports that we file with the SEC. Our CODM assesses performance and allocates resources in conjunction with and based on the operations of Lumen Technologies. Consequently, we do not provide our discrete financial information to the CODM on a regular basis. As such, we have one reportable segment.
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| Cost of Services and Products (Exclusive of Depreciation and Amortization) | Cost of services and products (exclusive of depreciation and amortization) are expenses incurred in providing products and services to our customers. These expenses include: employee-related expenses directly attributable to operating and maintaining our network (such as salaries, wages, benefits and professional fees); facilities expenses (which include third-party telecommunications expenses we incur for using other carriers' networks to provide services to our customers); rents and utilities expenses; equipment sales expenses; and other expenses directly related to our operations; and |
| Selling, General and Administrative Expenses | Selling, general and administrative expenses are corporate overhead and other operating expenses. These expenses include: employee-related expenses (such as salaries, wages, internal commissions, benefits and professional fees) directly attributable to selling products or services and employee-related expenses for administrative functions; marketing and advertising; property and other operating taxes and fees; external commissions; legal expenses associated with general matters; bad debt expense; and other selling, general and administrative expenses. |
| Use of Estimates | Use of Estimates Our consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles. These accounting principles require us to make certain estimates, judgments and assumptions. We believe that the estimates, judgments and assumptions we make when accounting for specific items and matters are reasonable, based on information available at the time they are made. These estimates, judgments and assumptions can materially affect the reported amounts of assets, liabilities and components of member's equity as of the dates of the consolidated balance sheets, as well as the reported amounts of revenue, expenses and components of cash flows during the periods presented in our other consolidated financial statements. We also make estimates in our assessments of potential losses in relation to threatened or pending tax and legal matters. See Note 13—Income Taxes and Note 16—Commitments, Contingencies and Other Items for additional information. For matters not related to income taxes, if a loss is considered probable and the amount can be reasonably estimated, we recognize an expense for the estimated loss. If we have the potential to recover a portion of the estimated loss from a third-party, we make a separate assessment of recoverability and reduce the estimated loss if recovery is also deemed probable. For matters related to income taxes, if we determine the impact of an uncertain tax position is more likely than not to be sustained upon audit by the relevant taxing authority, then we recognize a benefit for the largest amount that is more likely than not to be sustained. We do not recognize any portion of an uncertain tax position if the position has less than a 50% likelihood of being sustained. We recognize interest on the amount of unrecognized benefit from uncertain tax positions. For all of these and other matters, actual results could differ materially from our estimates.
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| Revenue Recognition | Revenue Recognition We earn most of our consolidated revenue from contracts with customers, primarily through the provision of communications and other services. Revenue from contracts with customers is accounted for under Accounting Standards Codification ("ASC") 606. We also earn revenue from leasing arrangements (primarily from fiber capacity and colocation agreements) which are not accounted for under ASC 606. Revenue is recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to receive in exchange for those goods or services. Revenue is recognized based on the following five-step model: •Identification of the contract with a customer; •Identification of the performance obligations in the contract; •Determination of the transaction price; •Allocation of the transaction price to the performance obligations in the contract; and •Recognition of revenue when, or as, we satisfy a performance obligation. We provide an array of communications services to business customers, including local voice, VPN, Ethernet, data, broadband, private line (including special access), network access, transport, voice, information technology, video and other ancillary services. We provide these services to a wide range of businesses, including global, enterprise, wholesale, government, and small and medium business customers. Certain contracts also include the sale of equipment, which is not significant to our business. We recognize revenue for services when we provide the applicable service or when control of a product is transferred. Recognition of certain payments received in advance of services being provided is deferred. These advance payments may include design, planning and engineering fees, as well as certain activation and installation charges. If these advance payments are not separate performance obligations, we recognize them as revenue over the actual or expected contract term using historical experience, which typically ranges from to five years depending on the service. In most cases, termination fees or other fees on existing contracts that are negotiated in conjunction with new contracts are deferred and recognized over the new contract term. For access services, we generally bill fixed monthly charges one month in advance to customers and recognize revenue as service is provided over the contract term in alignment with the customer's receipt of service. For usage and other ancillary services, we generally bill in arrears and recognize revenue as usage or delivery occurs. In most cases, the amount invoiced for our service offerings constitutes the price that would be billed on a standalone basis. In certain cases, customers may be permitted to modify their contracts. We evaluate the change in scope or price to identify whether the modification should be treated as a separate contract, as a termination of the existing contract and creation of a new contract, or as a change to the existing contract. Customer contracts are evaluated to determine whether the performance obligations are separable. If the performance obligations are deemed separable and separate earnings processes exist, the total transaction price that we expect to receive with the customer is allocated to each performance obligation based on its relative standalone selling price. The revenue associated with each performance obligation is then recognized as earned. We periodically sell transmission capacity on our network. These transactions are generally structured as indefeasible rights of use, commonly referred to as IRUs, which are the exclusive right to use a specified amount of capacity or fiber for a specified term, typically 20 years. In most cases, we account for the cash consideration received on transfers of transmission capacity as ASC 606 revenue, which is adjusted for the time value of money and is recognized ratably over the term of the agreement. Cash consideration received on transfers of dark fiber is accounted for as non-ASC 606 lease revenue, which we also recognize ratably over the term of the agreement. We do not recognize revenue on any contemporaneous exchanges of our optical capacity assets for other non-owned optical capacity assets. In connection with offering products and services provided to the end user by third-party vendors, we review the relationship between us, the vendor and the end user to assess whether revenue should be reported on a gross or net basis. In assessing whether revenue should be reported on a gross or net basis, we consider whether we act as a principal in the transaction and control the goods and services used to fulfill the performance obligations associated with the transaction. We have service level commitments pursuant to contracts with certain of our customers. To the extent that we determine that such service levels were not achieved or may not have been achieved, we estimate the amount of credits to be issued and record a corresponding reduction to revenue in the period that the service level commitment was not met or may not be met. Customer payments are made based on billing schedules included in our customer contracts, which is typically on a monthly basis. We defer (or capitalize) incremental contract acquisition and fulfillment costs and recognize (or amortize) such costs over the average contract life. Our deferred contract costs for our customers have average amortization periods of approximately 36 months. These deferred costs are periodically monitored to reflect any significant change in assumptions.
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| Affiliate Transactions | Affiliate Transactions We provide services to our affiliates that we also provide to external customers. These services are recognized as operating revenue-affiliates in our consolidated statements of operations. Services provided to us from our affiliates are recognized as operating expenses-affiliates on our consolidated statements of operations. Because of the significance of the services we provide to our affiliates and our affiliates provide to us, the results of operations, financial position and cash flows presented herein are not necessarily indicative of the results of operations, financial position and cash flows we would have achieved had we operated as a stand-alone entity during the periods presented. We recognize intercompany charges at the amounts billed to us by our affiliates and we recognize intercompany revenue for services we bill to our affiliates. The resulting net balance for transactions between us and our affiliates at the end of each period is reported as accounts receivables - affiliates or accounts payable - affiliates on the accompanying consolidated balance sheets. From time to time, to the extent permitted by our debt covenants, we make distributions to and receive contributions from our parent, which decrease or increase our capital resources for debt repayments or other purposes. Distributions and contributions are reflected on our consolidated statements of member's equity and our consolidated statements of cash flows reflects distributions and contributions made as financing activities. Non-cash distributions are reflected in the supplemental non-cash information regarding financing activities in our consolidated statements of cash flows. Our ultimate parent company, Lumen Technologies, is currently indebted to us under a revolving credit facility.
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| Legal Costs | Legal Costs In the normal course of our business, we incur costs to hire and retain external legal counsel to advise us on finance, regulatory, litigation and other matters. Subject to certain exceptions, we expense these costs as the related services are received.
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| Income Taxes | Income Taxes Lumen Technologies treats our consolidated results as if we were a separate taxpayer. Our reported deferred tax assets and liabilities, as discussed below and in Note 13—Income Taxes, are primarily determined as a result of the application of the separate return method and therefore the settlement of these amounts is dependent upon our parent, Lumen Technologies, rather than tax authorities. We are required to pay our tax liabilities based upon our separate return taxable income. We are also included in the combined state tax returns filed by Lumen Technologies. The provision for income taxes consists of an amount for taxes currently payable, an amount for tax consequences deferred to future periods and adjustments to our liabilities for uncertain tax positions. We record deferred income tax assets and liabilities reflecting future tax consequences attributable to tax NOLs, tax credit carryforwards and differences between the financial statement carrying value of assets and liabilities and the tax basis of those assets and liabilities. Deferred taxes are computed using enacted tax rates expected to apply in the year in which the differences are expected to affect taxable income. The effect on deferred income tax assets and liabilities of a change in tax rate is recognized in earnings in the period that includes the enactment date. We establish valuation allowances when necessary to reduce deferred income tax assets to the amounts that we believe are more likely than not to be recovered. Each quarter we evaluate the need to retain or adjust each valuation allowance on our deferred tax assets.
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| Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents include highly liquid investments that are readily convertible into cash and are not subject to significant risk from fluctuations in interest rates. As a result, the value at which cash and cash equivalents are reported in our consolidated financial statements approximates their fair value. In evaluating investments for classification as cash equivalents, we require that individual securities have original maturities of ninety days or less and that individual investment funds have dollar-weighted average maturities of ninety days or less. To preserve capital and maintain liquidity, we invest with financial institutions we deem to be of sound financial condition and in high quality and relatively risk-free investment products. Our cash investment policy limits the concentration of investments with specific financial institutions or among certain products and includes criteria related to credit worthiness of any particular financial institution. Book overdrafts occur when we have issued checks but they have not yet been presented to our controlled disbursement bank accounts for payment. Disbursement bank accounts allow us to delay funding of issued checks until the checks are presented for payment. Until the issued checks are presented for payment, the book overdrafts are included in accounts payable on our consolidated balance sheets. This activity is included in the operating activities section in our consolidated statements of cash flows.
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| Restricted Cash | Restricted Cash Restricted cash consist primarily of cash and investments that serve to collateralize our outstanding letters of credit and certain performance and operating obligations. Restricted cash is recorded as current or non-current assets in the consolidated balance sheets depending on the duration of the restriction and the purpose for which the restriction exists.
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| Accounts Receivable and Allowance for Credit Losses | Accounts Receivable and Allowance for Credit Losses Accounts receivable are recognized based upon the amount due from customers for the services provided or at cost for other receivables, less an allowance for credit losses. We use a loss rate method to estimate our allowance for credit losses. For more information on our methodology for estimating our allowance for credit losses, see Note 6—Credit Losses on Financial Instruments. We generally consider our accounts past due if they are outstanding over 30 days. Our past due accounts are written off against our allowance for credit losses and any recoveries of accounts previously written off are generally recognized as a reduction in bad debt expense in the period received. The carrying value of accounts receivable net of the allowance for credit losses approximates fair value.
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| Concentration of Credit Risk | Concentration of Credit Risk We provide communications services to a wide range of wholesale and enterprise customers, ranging from well capitalized global enterprises to small early stage companies primarily in the United States. Credit risk with respect to accounts receivable is generally diversified due to the large number of entities comprising our customer base and their dispersion across many different industries and geographical regions. We perform ongoing credit evaluations of our customers' financial condition and generally require no collateral from our customers, although letters of credit and deposits are required in certain limited circumstances. We have, from time to time, entered into agreements with value added resellers and other channel partners to reach enterprise markets for voice services. We have policies and procedures in place to evaluate the financial condition of these resellers prior to initiating service to the final customer. We are not able to predict changes in the financial stability of our customers. Any material changes in the financial status of any one or a particular group of customers may cause us to adjust our estimate of the recoverability of receivables and could have a material effect on our results of operation.
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| Assets Held for Sale | Assets Held for Sale We classify assets and related liabilities as held for sale when: (i) management has committed to a plan to sell the assets, (ii) the net assets are available for immediate sale, (iii) there is an active program to locate a buyer and (iv) the sale and transfer of the net assets is probable within one year. Assets and liabilities held for sale are presented separately on our consolidated balance sheets with a valuation allowance, if necessary, to recognize the net carrying amount at the lower of cost or fair value, less costs to sell. Depreciation of property, plant and equipment and amortization of finite-lived intangible assets and right-of-use assets are not recorded while these assets are classified as held for sale. For each period that assets are classified as being held for sale, they are tested for recoverability.
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| Property, Plant and Equipment | Property, Plant and Equipment We record purchased and constructed property, plant and equipment at cost, plus the estimated value of any associated legally or contractually required retirement obligations. We depreciate our property, plant and equipment using the straight-line method. Leasehold improvements are amortized over the shorter of the useful lives of the assets or the expected lease term. Expenditures for maintenance and repairs are expensed as incurred. During the construction phase of network and other internal-use capital projects, we capitalize related employee and interest costs. Property, plant and equipment supplies used internally are carried at average cost, except for significant individual items which are carried at actual cost. We perform annual internal reviews to evaluate the reasonableness of the depreciable lives for our property, plant and equipment. Our reviews take into account actual usage, the physical condition of our property, plant, and equipment, industry data, and other relevant factors. Our remaining useful life assessments evaluate the possible loss in service value of assets that may precede the physical retirement. Assets shared among many customers may lose service value as those customers reduce their use of the asset. However, the asset is not retired until all customers no longer utilize the asset and we determine there is not alternative use for the asset. We have asset retirement obligations associated with the legally or contractually required removal of a limited group of property, plant and equipment assets from leased properties and the disposal of certain hazardous materials present in our owned properties. When an asset retirement obligation is identified, usually in association with the acquisition of the asset, we record the fair value of the obligation as a liability. The fair value of the obligation is also capitalized as property, plant and equipment and then amortized over the estimated remaining useful life of the associated asset. Where the removal obligation is not legally binding, we expense the net cost to remove assets in the period in which the costs are actually incurred. We review long-lived tangible assets for impairment whenever facts and circumstances indicate that the carrying amounts of the assets may not be recoverable. For assessment purposes, long-lived assets are grouped with other assets and liabilities at the lowest identifiable level for which we generate cash flows independently of other groups of assets and liabilities, absent a material change in operations. An impairment loss is recognized only if the carrying amount of the asset group is not recoverable and exceeds its estimated fair value. Recoverability of the asset group to be held and used is assessed by comparing the carrying amount of the asset group to the estimated undiscounted future net cash flows expected to be generated by the asset group. If the asset group's carrying value is not recoverable, we recognize an impairment charge for the amount by which the carrying amount of the asset group exceeds its estimated fair value.
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| Goodwill, Customer Relationships and Other Intangible Assets | Goodwill, Customer Relationships and Other Intangible Assets Intangible assets arising from business combinations, such as goodwill, customer relationships, capitalized software, trademarks and trade names, are initially recorded at estimated fair value. We amortize customer relationships primarily over an estimated life of to 14 years, using the straight-line method, depending on the type of customer. We amortize capitalized software using the straight-line method primarily over estimated lives ranging up to seven years. We amortized our other intangible assets over an estimated life of five years prior to becoming fully amortized in the fourth quarter of 2023. Other intangible assets not arising from business combinations are initially recorded at cost. Where there are no legal, regulatory, contractual or other factors that would reasonably limit the useful life of an intangible asset, we classify the intangible asset as indefinite-lived and such intangible assets are not amortized. Internally used software, whether purchased or developed by us, is capitalized and amortized using the straight-line method over its estimated useful life. We have capitalized certain costs associated with software such as costs of employees devoted to software development and external direct costs for materials and services. Costs associated with software to be used for internal purposes are expensed until the point at which the project has reached the development stage. Subsequent additions, modifications or upgrades to internal-use software are capitalized only to the extent that they allow the software to perform a task it previously did not perform. Software maintenance, data conversion and training costs are expensed in the period in which they are incurred. We review the remaining economic lives of our capitalized software annually. Capitalized software is included in other intangible assets, net, in our consolidated balance sheets. Prior to becoming fully impaired in the second quarter of 2023, we were required to assess our goodwill for impairment annually, or more frequently if an event occurred or circumstances changed that would indicate it was more likely than not the fair value of our reporting unit was less than the carrying value. The impairment assessment was performed at the reporting unit level. We have determined that our operations consist of one reporting unit, consistent with our determination that our business consists of one operating segment. We were required to write-down the value of goodwill in periods in which the carrying amount of our reporting unit's equity exceeded the estimated fair value of the equity of the reporting unit, limited to the goodwill balance.
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| Foreign Currency | Foreign Currency Local currencies of our foreign subsidiaries are the functional currencies for financial reporting purposes except for certain foreign subsidiaries, primarily in Latin America prior to the August 1, 2022 sale of our Latin American business. For operations outside the United States that have functional currencies other than the U.S. dollar, assets and liabilities are translated to U.S. dollars at period-end exchange rates, and revenue, expenses and cash flows are translated using average monthly exchange rates. Prior to the November 1, 2023 sale of our EMEA business and the August 1, 2022 sale of our Latin American business, a significant portion of our non-United States subsidiaries used the British pound, the Euro or the Brazilian Real, as their functional currency, each of which experienced significant fluctuations against the U.S. dollar during the periods covered by this report when we operated the divested businesses. We recognize foreign currency translation gains and losses as a component of accumulated other comprehensive loss in member's equity in our consolidated balance sheet and in our consolidated statements of comprehensive (loss) income in accordance with accounting guidance for foreign currency translation. Prior to the completion of our divestitures as discussed in Note 2—Divestitures of the Latin American and EMEA Businesses, we considered the majority of our investments in our foreign subsidiaries to be long-term in nature. Our foreign currency transaction gains (losses), including where transactions with our non-United States subsidiaries are not considered to be long-term in nature, are included within Other income, net on our consolidated statements of operations.
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| Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements Segments On January 1, 2024 we adopted Accounting Standards Update ("ASU") 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures.” This ASU is intended to improve reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. The ASU does not change how a public entity identifies its operating segments, aggregates them or applies quantitative thresholds to determine reportable segments. Public entities with a single reportable segment are required to provide the new disclosures and all the disclosures required under ASC 280, "Segment Reporting." We did not early adopt this standard. The adoption of this ASU did not have a material impact on our consolidated financial statements. Investments On January 1, 2024, we adopted ASU 2023-02, “Investments-Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method.” This ASU allows 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. The adoption of this ASU did not have any impact on our consolidated financial statements. On January 1, 2024, we adopted ASU 2022-03, “Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions.” This ASU clarifies 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 its fair value. The adoption of this ASU did not have any impact on our consolidated financial statements. Leases On January 1, 2024, we adopted ASU 2023-01, “Leases (Topic 842): Common Control Arrangements.” This ASU requires all entities to amortize leasehold improvements associated with common control leases over the useful life to the common control group. The adoption of this ASU did not have any impact on our consolidated financial statements. On January 1, 2022, we adopted ASU 2021-05, “Leases (Topic 842): Lessors—Certain Leases with Variable Lease Payments.” This ASU (i) amends the lease classification requirements for lessors, (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 this ASU did not have a material impact on our consolidated financial statements. Reference Rate Reform In December 2022, the Financial Accounting Standards Board (“FASB”) issued ASU 2022-06, “Reference Rate Reform (Topic 848) – Deferral of the Sunset Date of Topic 848." This ASU, which was effective upon issuance, extends the period of time preparers can utilize the reference rate reform relief guidance in Topic 848, by deferring the sunset date from December 31, 2022, to December 31, 2024, after which entities will no longer be permitted to apply the relief in Topic 848. Based on our review of our key material contracts through December 31, 2024, this ASU does not have a material impact on our consolidated financial statements. Supplier Finance Programs On January 1, 2023, we adopted ASU 2022-04, “Liabilities-Supplier Finance Program (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations.” This ASU requires that a company that uses a supplier finance program in connection with the purchase of goods or services to 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 the potential magnitude of program transactions. The adoption of this ASU did not have a material impact on 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.” 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 this ASU did not have a material impact on our consolidated financial statements. Adoption of Other ASUs In July 2023, the FASB issued ASU 2023-03, “Presentation of Financial Statements (Topic 205), Income Statement—Reporting Comprehensive Income (Topic 220), Distinguishing Liabilities from Equity (Topic 480), Equity (Topic 505), and Compensation—Stock Compensation (Topic 718): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 120, SEC Staff Announcement at the March 24, 2022 EITF Meeting, and Staff Accounting Bulletin Topic 6.B, Accounting Series Release 280—General Revision of Regulation S-X: Income or Loss Applicable to Common Stock.” This ASU became effective for us once the addition to the FASB Codification was made available in July 2023. This ASU amends or supersedes various SEC paragraphs within the applicable codification to conform to past SEC staff announcements. This ASU does not provide any new guidance. The adoption of this ASU did not have any impact on our consolidated financial statements. Recently Issued Accounting Pronouncements In November 2024, the FASB issued ASU 2024-04, "Debt—Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments." This ASU clarifies the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as induced conversions rather than as debt extinguishments. This standard is effective for the annual period of fiscal 2026, and early adoption is permitted. As of December 31, 2024, we do not hold convertible debt instruments and do not expect this ASU will have any impact on our consolidated financial statements. In November 2024, the FASB issued ASU 2024-03 "Disaggregation of Income Statement Expenses." This ASU requires additional footnote disclosure of the details of certain income statement expense line items as well as, additional disclosure about selling expenses. This standard is effective for the annual period of fiscal 2027, and early adoption is permitted. The guidance is to be applied prospectively, with the option for retrospective application. We are currently evaluating the impact the adoption of this standard will have on our disclosures. In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” This ASU requires that public business entities must annually (1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than 5 percent of the amount computed by multiplying pretax income or loss by the applicable statutory income tax rate).” This ASU will become effective for us in the annual period of fiscal 2025 and early adoption is permitted. We have chosen not to early adopt this ASU and are currently evaluating its impact on our consolidated financial statements, including our annual disclosure within our Income Taxes footnote. In December 2023, the FASB issued ASU 2023-08, “Intangibles—Goodwill and Other—Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets.” This ASU is intended to improve the accounting for certain crypto assets by requiring an entity to measure those crypto assets at fair value each reporting period with changes in fair value recognized in net income. The amendments also improve the information provided to investors about an entity’s crypto asset holdings by requiring disclosure about significant holdings, contractual sale restrictions, and changes during the reporting period. This ASU will become effective for us in the first quarter of fiscal 2025 and early adoption is permitted. As of December 31, 2024, we do not hold crypto assets and do not expect this ASU to have any impact on our consolidated financial statements. In October 2023, the FASB issued ASU 2023-06, “Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative.” This ASU incorporates certain SEC disclosure requirements into the FASB Codification. The amendments in the ASU are expected to clarify or improve disclosure and presentation requirements of a variety of FASB Codification topics, allow users to more easily compare entities subject to the SEC’s existing disclosures with those entities that were not previously subject to the requirements, and align the requirements in the FASB Codification with the SEC’s regulations. This ASU will become effective for each amendment on the effective date of the SEC's corresponding disclosure rule changes. As of December 31, 2024, we do not expect this ASU will have any impact on our consolidated financial statements. In August 2023, the FASB issued ASU 2023-05, “Business Combinations – Joint Venture Formations (Subtopic 805-60): Recognition and Initial Measurement.” This ASU applies to the formation of entities that meet the definition of a joint venture (or a corporate joint venture). The amendments in the ASU require that a joint venture apply a new basis of accounting upon formation. This ASU will become effective for us in the first quarter of fiscal 2025 and early adoption is permitted. As of December 31, 2024, we do not expect this ASU will have any impact on our consolidated financial statements.
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| 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.
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Divestitures of the Latin American and EMEA Businesses (Tables) |
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| Components of pre-tax net income and held for sale assets and liabilities | As a result of closing the transaction, we derecognized $1.4 billion of net assets, the principal components of which were as follows:
______________________________________________________________________ (1) Includes the impact of $350 million realized loss on foreign currency translation, net of tax, reclassified out of accumulated other comprehensive loss as of December 31, 2023 to the valuation allowance and loss on sale of the EMEA business.
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Goodwill, Customer Relationships and Other Intangible Assets (Tables) |
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| Schedule of goodwill, customer relationships and other intangible assets | Customer relationships and other intangible assets consisted of the following:
______________________________________________________________________ (1)For the year ended December 31, 2023, customer relationships decreased $121 million in conjunction with the sale of select CDN contracts in the fourth quarter of 2023 that resulted in a net loss of $73 million included in selling, general and administrative expenses in our consolidated statement of operations.
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| Schedule of goodwill | The following table shows the rollforward of goodwill from December 31, 2022 through December 31, 2023:
_______________________________________________________________________________ (1)Goodwill at December 31, 2022 is net of accumulated impairment loss of $8.2 billion.
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| Schedule of estimated amortization expense of intangible asset | We estimate that future total amortization expense for finite-lived intangible assets will be as follows:
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Revenue Recognition (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Disaggregation of revenue | They also provide 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. The amounts in the tables below include revenue for the Latin American and EMEA businesses prior to their sales on August 1, 2022 and November 1, 2023, respectively:
_______________________________________________________________ (1) Includes lease revenue which is not within the scope of ASC 606.
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| Contract with customer, asset and liability | The following table provides balances of customer receivables, contract assets and contract liabilities, net of amounts classified as held for sale:
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| Capitalized contract cost | The following tables provide changes in our contract acquisition costs and fulfillment costs:
_____________________________________________________________________ (1)Beginning of period balance for the year ended December 31, 2023 excludes $6 million of acquisition costs and no fulfillment costs classified as held for sale related to the EMEA business.
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Leases (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Lease, cost | Lease expense consisted of the following:
Supplemental consolidated cash flow statement information related to leases is included below:
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| Assets and liabilities | Supplemental consolidated balance sheet information and other information related to leases is included below:
(1) Includes affiliate operating lease assets of $234 million and $311 million as of December 31, 2024 and 2023, respectively. (2) Includes current portion of affiliate operating lease liabilities of $113 million and $129 million as of December 31, 2024 and 2023, respectively. (3) Includes noncurrent portion of affiliate operating lease liabilities of $128 million and $201 million as of December 31, 2024 and 2023, respectively.
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| Lessee, operating lease, liability, maturity | As of December 31, 2024, maturities of lease liabilities were as follows:
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| Finance lease, liability, maturity | As of December 31, 2024, maturities of lease liabilities were as follows:
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Credit Losses on Financial Instruments (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Credit Loss [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Allowance for credit losses on financing receivables | The following table presents the activity of our allowance for credit losses for our accounts receivable portfolio:
______________________________________________________________________ (1) Represents changes in amounts classified as held for sale related to the divestitures of our Latin American and EMEA businesses prior to the divestitures on August 1, 2022 and November 1, 2023, respectively. See Note 2—Divestitures of the Latin American and EMEA Businesses.
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Long-Term Debt (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of long-term debt | The following table reflects our consolidated long-term debt, including finance leases and other obligations, unamortized discounts and premiums, net and unamortized debt issuance costs, but excluding intercompany debt:
_______________________________________________________________________________ N/A - Not applicable (1)As of December 31, 2024. All references to "SOFR" refer to the Secured Overnight Financing Rate. (2)As discussed further below in this Note, the debt listed under the caption “Senior Secured Debt” is secured by assets of Level 3 Financing and guaranteed on a secured basis by certain of its affiliates. As discussed further in footnote 6, we reclassified in the "December 31, 2024" column of the table above certain notes that were secured prior to the TSA Effective Date (as defined below) from "secured" to "unsecured" in light of amendments that released such prior security interests. (3)The Term Loan B-1 and B-2 each had an interest rate of 11.133% as of December 31, 2024. (4)Reflects Level 3 Tranche B 2027 Term Loan issued under a predecessor facility, which had an interest rate of 6.437% and 7.220% as of December 31, 2024 and December 31, 2023, respectively. (5)Includes Level 3 Financing's 10.500% Senior Secured Notes due 2030 issued in early 2023, the terms of which have been amended to be consistent with Level 3 Financing's First Lien Notes issued on March 22, 2024. (6)Two series of former Level 3 Senior Notes due in 2027 and 2029 bearing interest rates of 3.400% and 3.875% as of December 31, 2023, were amended on the TSA Effective Date in the manner discussed in Note 7—Long-Term Debt. (7)The total debt for these notes at December 31, 2024 includes the remaining aggregate principal amount due under Level 3 Financing's Former Secured Notes, the terms of which were amended on March 22, 2024 to release the security interests relating thereto.
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| Schedule of aggregate future contractual maturities of long-term debt | Set forth below is the aggregate principal amount of our long-term debt as of December 31, 2024 (excluding unamortized (discounts) premiums, net, unamortized debt issuance costs and intercompany debt) maturing during the following years:
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| Schedule of debt retirements | The following table sets forth the aggregate principal amount of each series of senior notes retired in exchange for cash in November 2024 in connection with the Cash Tender Offers:
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| Schedule of debt issuances | The following table sets forth the aggregate principal amount of each series of senior unsecured notes of Level 3 Financing exchanged and retired on September 24, 2024 in connection with the Exchange Offers:
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| Schedule of debt repayments | The following table sets forth the aggregate principal amount of (i) former debt of Level 3 Financing exchanged for new Level 3 Financing debt and (ii) new debt issued by Level 3 in exchange for former Level 3 debt (except as otherwise noted), in each case during the first quarter of 2024 in connection with the TSA Transactions:
______________________________________________________________________ N/A - Not applicable (1)See our long-term debt table above for information on the amount of former debt that remains outstanding as of December 31, 2024.
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| Schedule of debt repurchases | The following table sets forth the aggregate principal amount of each series of notes repurchased during the year ended December 31, 2024:
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| Changes in supplier finance program | Changes in our were as follows:
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| Schedule of amount of gross interest expense, net of capitalized interest | Interest expense includes interest on total long-term debt. The following table presents the amount of gross interest expense, net of capitalized interest:
______________________________________________________________________ (1) The increase in interest expense for the year ended December 31, 2024 was primarily driven by an increase in average outstanding long-term debt of approximately $780 million.
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Accounts Receivable (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of accounts receivable | The following table presents details of our accounts receivable balances:
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Property, Plant and Equipment (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property, Plant and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property, plant and equipment | Net property, plant and equipment is composed of the following:
_______________________________________________________________________________ (1)Fiber, conduit and other outside plant consists of fiber and metallic cable, conduit, poles and other supporting structures. (2)Central office and other network electronics consists of circuit and packet switches, routers, transmission electronics and electronics providing service to customers. (3)Support assets consist of buildings, data centers, computers and other administrative and support equipment. (4)Construction in progress includes construction and property of the aforementioned categories that has not been placed in service as it is still under construction.
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| Schedule of change in asset retirement obligation | The following table provides asset retirement obligation activity:
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Severance (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of restructuring reserve by type of cost | Changes in our accrued liabilities for severance expenses were as follows:
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Employee Benefits (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Funded Status of Defined Benefit Plans | The following table presents the funded status of our defined benefit plans as of December 31, 2024 and 2023:
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Fair Value of Financial Instruments (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair value measurement inputs and valuation techniques | The three input levels in the hierarchy of fair value measurements are defined by the FASB are generally as follows:
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| Schedule of fair value of liabilities measured on a recurring basis | The following table presents the carrying amounts and estimated fair values of our financial liabilities as of December 31, 2024 and 2023, as well as the input level used to determine the fair values indicated below:
_______________________________________________________________________________ (1)Non-recurring fair value recorded in connection with the sale of our Latin American business was measured as of August 1, 2022. See Note 2—Divestitures of the Latin American and EMEA Businesses for further details.
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Income Taxes (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Components of income tax (benefit) expense | The components of the income tax (benefit) expense are as follows:
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| Schedule of income before income tax, domestic and foreign | Income tax (benefit) expense was allocated as follows:
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| Schedule of effective income tax rate reconciliation | The following is a reconciliation from the statutory federal income tax rate to our effective income tax rate:
_______________________________________________________________________________ (1)Includes Global Intangible Low-Taxes Income ("GILTI") incurred as a result of the sale of our Latin American business.
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| Deferred tax assets and liabilities | The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and deferred tax liabilities were as follows:
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| Schedule of unrecognized tax benefits | A reconciliation of the change in our gross unrecognized tax benefits (excluding both interest and any related federal benefit) for the years ended December 31, 2024 and 2023 is as follows:
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Geographic and Customer Concentrations (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revenues [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of operating revenues by geographic region | For the years ended December 31, 2024 and 2023, all of our assets were in North America. The table below shows our operating revenue for the years ended December 31, 2024, 2023 and 2022 by geographic region:
_______________________________________________________________________________ (1)Includes revenue prior to closing the sale of the Latin American business on August 1, 2022, revenue recognized through post-closing commercial agreements subsequent to the sale and revenue related to servicing our customers in those regions. (2)Includes revenue prior to closing the sale of the EMEA business on November 1, 2023.
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Commitments, Contingencies and Other Items (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of future rental commitments for right-of-way agreements | At December 31, 2024, our future rental commitments and Right-of-Way ("ROW") agreements were as follows:
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Accumulated Other Comprehensive Income (Loss) (Tables) |
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| Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of accumulated other comprehensive income (loss) | The table below summarizes changes in accumulated other comprehensive loss recorded on our consolidated balance sheet by component for the years ended December 31, 2024 and 2023:
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| Reclassification out of accumulated other comprehensive (loss) income | The table below presents further information about our reclassifications out of accumulated other comprehensive (loss) income by component for the year ended December 31, 2023:
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Other Financial Information (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other Current Assets | The following table presents details of other current assets reflected in our consolidated balance sheets:
|
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Goodwill, Customer Relationships and Other Intangible Assets - Schedule of Goodwill and Intangible Assets (Details) - USD ($) $ in Millions |
3 Months Ended | 12 Months Ended | |
|---|---|---|---|
Dec. 31, 2023 |
Dec. 31, 2023 |
Dec. 31, 2024 |
|
| Finite-Lived and Indefinite-Lived Intangible Assets | |||
| Finite lived intangible assets, net | $ 4,237 | $ 4,237 | $ 3,569 |
| Customer relationships | |||
| Finite-Lived and Indefinite-Lived Intangible Assets | |||
| Finite lived intangible assets, net | 3,810 | 3,810 | 3,196 |
| Accumulated amortization | 3,896 | 3,896 | 4,504 |
| Loss on intangible asset disposition | 73 | 121 | |
| Capitalized software | |||
| Finite-Lived and Indefinite-Lived Intangible Assets | |||
| Finite lived intangible assets, net | 427 | 427 | 373 |
| Accumulated amortization | $ 419 | $ 419 | $ 451 |
Goodwill, Customer Relationships and Other Intangible Assets - Goodwill Activity (Details) - USD ($) $ in Millions |
3 Months Ended | 12 Months Ended | ||
|---|---|---|---|---|
Jun. 30, 2023 |
Dec. 31, 2024 |
Dec. 31, 2023 |
Dec. 31, 2022 |
|
| Goodwill [Roll Forward] | ||||
| Beginning balance | $ 0 | $ 1,970 | ||
| Impairment | $ (2,000) | 0 | (1,970) | $ (4,638) |
| Ending balance | $ 0 | $ 0 | 1,970 | |
| Accumulated impairment loss | $ 8,200 | |||
Goodwill, Customer Relationships and Other Intangible Assets - Future Amortization Expense (Details) - USD ($) $ in Millions |
Dec. 31, 2024 |
Dec. 31, 2023 |
|---|---|---|
| Estimated amortization expense of acquired finite-lived intangible asset | ||
| 2025 | $ 654 | |
| 2026 | 642 | |
| 2027 | 600 | |
| 2028 | 558 | |
| 2029 | 368 | |
| 2030 and thereafter | 747 | |
| Total finite-lived intangible assets future amortization expense | $ 3,569 | $ 4,237 |
Revenue Recognition - Customer Receivables and Contract Balances (Details) - USD ($) $ in Millions |
Dec. 31, 2024 |
Dec. 31, 2023 |
|---|---|---|
| Revenue from Contract with Customer [Abstract] | ||
| Customer receivables | $ 529 | $ 544 |
| Contract assets | 12 | 8 |
| Contract liabilities | 267 | 222 |
| Allowance for credit loss | $ 12 | $ 13 |
Revenue Recognition - Additional Information (Details) - USD ($) $ in Millions |
12 Months Ended | |||
|---|---|---|---|---|
Dec. 31, 2024 |
Dec. 31, 2023 |
Jan. 01, 2024 |
Jan. 01, 2023 |
|
| Disaggregation of Revenue [Line Items] | ||||
| Amounts included in contract liability | $ 120 | $ 139 | ||
| Contract liabilities | $ 222 | $ 281 | ||
| Minimum | ||||
| Disaggregation of Revenue [Line Items] | ||||
| Contract term | 1 year | |||
| Maximum | ||||
| Disaggregation of Revenue [Line Items] | ||||
| Contract term | 5 years | |||
| Weighted Average | Business Customers | ||||
| Disaggregation of Revenue [Line Items] | ||||
| Length of customer life | 36 months | |||
Revenue Recognition - Contract Costs (Details) - USD ($) |
12 Months Ended | |
|---|---|---|
Dec. 31, 2024 |
Dec. 31, 2023 |
|
| Acquisition Costs | ||
| Capitalized Contract Cost [Roll Forward] | ||
| Beginning of period balance | $ 70,000,000 | $ 76,000,000 |
| Costs incurred | 55,000,000 | 55,000,000 |
| Amortization | (48,000,000) | (57,000,000) |
| Classified as held for sale | (4,000,000) | |
| End of period balance | 77,000,000 | 70,000,000 |
| Acquisition Costs | Disposal Group, Held-for-sale | EMEA Business | ||
| Capitalized Contract Cost [Roll Forward] | ||
| Beginning of period balance | 6,000,000 | |
| Fulfillment Costs | ||
| Capitalized Contract Cost [Roll Forward] | ||
| Beginning of period balance | 97,000,000 | 106,000,000 |
| Costs incurred | 103,000,000 | 87,000,000 |
| Amortization | (73,000,000) | (69,000,000) |
| Classified as held for sale | (27,000,000) | |
| End of period balance | $ 127,000,000 | 97,000,000 |
| Fulfillment Costs | Disposal Group, Held-for-sale | EMEA Business | ||
| Capitalized Contract Cost [Roll Forward] | ||
| Beginning of period balance | $ 0 | |
Leases - Lease Expense (Details) - USD ($) $ in Millions |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2024 |
Dec. 31, 2023 |
Dec. 31, 2022 |
|
| Leases [Abstract] | |||
| Operating and short-term lease cost | $ 375 | $ 384 | $ 348 |
| Finance lease cost: | |||
| Amortization of right-of-use assets | 18 | 23 | 25 |
| Interest on lease liability | 10 | 10 | 11 |
| Total finance lease cost | 28 | 33 | 36 |
| Total lease cost | $ 403 | $ 417 | $ 384 |
Leases - Additional Information (Details) - USD ($) $ in Millions |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2024 |
Dec. 31, 2023 |
Dec. 31, 2022 |
|
| Leases [Abstract] | |||
| Gross rental expense | $ 403 | $ 417 | $ 384 |
| Sublease rental income | $ 13 | $ 14 | $ 14 |
| Operating Lease, Lease Income, Statement of Income or Comprehensive Income [Extensible Enumeration] | Total operating revenue | Total operating revenue | Total operating revenue |
| Gross rental income | $ 694 | $ 676 | $ 746 |
| Rental income as percentage of operating revenue | 11.00% | 10.00% | 10.00% |
Leases - Supplemental Cash Flow Information (Details) - USD ($) $ in Millions |
12 Months Ended | |
|---|---|---|
Dec. 31, 2024 |
Dec. 31, 2023 |
|
| Leases [Abstract] | ||
| Operating cash flows for operating leases | $ 365 | $ 384 |
| Operating cash flows for finance leases | 10 | 10 |
| Financing cash flows for finance leases | 16 | 23 |
| Operating lease right-of-use assets obtained in exchange for new operating lease liabilities | 124 | 104 |
| Right-of-use assets obtained in exchange for new finance lease liabilities | $ 2 | $ 8 |
Leases - Maturities of Lease Liabilities (Details) - USD ($) $ in Millions |
Dec. 31, 2024 |
Dec. 31, 2023 |
|---|---|---|
| Operating Leases | ||
| 2025 | $ 326 | |
| 2026 | 233 | |
| 2027 | 156 | |
| 2028 | 114 | |
| 2029 | 81 | |
| Thereafter | 378 | |
| Total lease payments | 1,288 | |
| Less: interest | (303) | |
| Total | 985 | |
| Less: current portion | (266) | $ (288) |
| Operating lease liabilities | 719 | 845 |
| Finance Leases | ||
| 2025 | 25 | |
| 2026 | 25 | |
| 2027 | 26 | |
| 2028 | 26 | |
| 2029 | 24 | |
| Thereafter | 111 | |
| Total lease payments | 237 | |
| Less: interest | (47) | |
| Total | 190 | |
| Less: current portion | (16) | (14) |
| Long-term portion | $ 174 | $ 190 |
Credit Losses on Financial Instruments (Details) - USD ($) $ in Millions |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2024 |
Dec. 31, 2023 |
Dec. 31, 2022 |
|
| Financing Receivable, Allowance for Credit Loss [Roll Forward] | |||
| Balance at beginning of period | $ 13 | $ 19 | $ 39 |
| Provision for expected losses | 8 | 8 | 4 |
| Write-offs charged against the allowance | (12) | (19) | (22) |
| Recoveries collected | 3 | 4 | 3 |
| Classified as held for sale | 0 | 1 | (5) |
| Balance at end of period | $ 12 | $ 13 | $ 19 |
Long-Term Debt - Maturities of Debt (Details) $ in Millions |
Dec. 31, 2024
USD ($)
|
|---|---|
| Debt Disclosure [Abstract] | |
| 2025 | $ 36 |
| 2026 | 35 |
| 2027 | 101 |
| 2028 | 197 |
| 2029 | 4,782 |
| 2030 and thereafter | 4,877 |
| Total long-term debt | $ 10,028 |
Long-Term Debt - Cash Tender Offers, Additional Information (Details) - USD ($) $ in Millions |
1 Months Ended | 12 Months Ended | |
|---|---|---|---|
Sep. 24, 2024 |
Nov. 30, 2024 |
Dec. 31, 2024 |
|
| Debt Instrument [Line Items] | |||
| Debt Instrument, Increase (Decrease), Net | $ 7 | $ 324 | |
| Gain (Loss) on Cash Tender Offers | $ 31 |
Long-Term Debt - Debt Retirements (Details) - USD ($) $ in Millions |
Dec. 31, 2024 |
Nov. 30, 2024 |
Mar. 31, 2024 |
|---|---|---|---|
| Debt Instrument [Line Items] | |||
| Aggregate principal amount | $ 7,548 | ||
| Senior Notes | |||
| Debt Instrument [Line Items] | |||
| Aggregate principal amount | $ 357 | $ 324 | |
| Senior Notes | 3.400% Senior Secured Notes Due 2027 Unsecured | |||
| Debt Instrument [Line Items] | |||
| Stated interest rate | 3.40% | 3.40% | |
| Aggregate principal amount | $ 77 | $ 1 | |
| Senior Notes | 4.625% Senior Notes Due 2027 | |||
| Debt Instrument [Line Items] | |||
| Stated interest rate | 4.625% | 4.625% | |
| Aggregate principal amount | $ 280 | $ 48 | |
| Senior Notes | 4.250% Senior Notes Due 2028 | |||
| Debt Instrument [Line Items] | |||
| Stated interest rate | 4.25% | 4.25% | |
| Aggregate principal amount | $ 275 |
Long-Term Debt - Exchange Offers, Additional Information (Details) $ in Millions |
1 Months Ended | 12 Months Ended | ||
|---|---|---|---|---|
|
Sep. 24, 2024
USD ($)
numberOfSeries
|
Nov. 30, 2024
USD ($)
|
Dec. 31, 2024
USD ($)
|
Mar. 31, 2024
USD ($)
|
|
| Debt Instrument [Line Items] | ||||
| Aggregate principal amount | $ 7,548 | |||
| Reduction in aggregate principal amount | $ 7 | $ 324 | ||
| Exchange Offer fees | $ 8 | |||
| Senior Notes | ||||
| Debt Instrument [Line Items] | ||||
| Aggregate principal amount | $ 324 | $ 357 | ||
| Senior Notes | 10.000% Second Lien Notes Due 2032 | ||||
| Debt Instrument [Line Items] | ||||
| Aggregate principal amount | $ 350 | |||
| Stated interest rate | 10.00% | |||
| Senior Notes | Senior Unsecured Notes Due 2027 | ||||
| Debt Instrument [Line Items] | ||||
| Aggregate principal amount | $ 357 | |||
| Number of series | numberOfSeries | 2 |
Long-Term Debt - Debt Issuances (Details) - USD ($) $ in Millions |
Dec. 31, 2024 |
Nov. 30, 2024 |
Mar. 31, 2024 |
|---|---|---|---|
| Debt Instrument [Line Items] | |||
| Aggregate principal amount | $ 7,548 | ||
| Senior Notes | |||
| Debt Instrument [Line Items] | |||
| Aggregate principal amount | $ 357 | $ 324 | |
| Senior Notes | 3.400% Senior Secured Notes Due 2027 Unsecured | |||
| Debt Instrument [Line Items] | |||
| Stated interest rate | 3.40% | 3.40% | |
| Aggregate principal amount | $ 77 | $ 1 | |
| Senior Notes | 4.625% Senior Notes Due 2027 | |||
| Debt Instrument [Line Items] | |||
| Stated interest rate | 4.625% | 4.625% | |
| Aggregate principal amount | $ 280 | $ 48 | |
| Senior Notes | 10.750% First Lien Notes Due 2029 | |||
| Debt Instrument [Line Items] | |||
| Stated interest rate | 10.75% | ||
| Aggregate principal amount | $ 678 |
Long-Term Debt - TSA Transactions, Additional Information (Details) - USD ($) $ in Millions |
3 Months Ended | 12 Months Ended | ||
|---|---|---|---|---|
Mar. 31, 2024 |
Dec. 31, 2024 |
Dec. 31, 2023 |
Dec. 31, 2022 |
|
| Debt Instrument [Line Items] | ||||
| Amount of debt redeemed | $ 2,600 | |||
| Reduction in debt resulting from extinguishment of debt | 261 | |||
| Gain on extinguishment of debt | $ 54 | $ 119 | $ 0 | $ 8 |
| Lender fees paid | 209 | |||
| Third party costs paid | 112 | |||
| Capitalized lender fees | 52 | |||
| Capitalized third party costs | 51 | |||
| Gain (loss) on extinguishment of debt | ||||
| Debt Instrument [Line Items] | ||||
| Lender fees recognized as expense | 157 | |||
| Operating expense | ||||
| Debt Instrument [Line Items] | ||||
| Third party costs expensed | $ 61 | |||
Long-Term Debt - Debt Repurchases (Details) - USD ($) $ in Millions |
3 Months Ended | 12 Months Ended | |||
|---|---|---|---|---|---|
Mar. 31, 2024 |
Dec. 31, 2024 |
Dec. 31, 2023 |
Dec. 31, 2022 |
Nov. 30, 2024 |
|
| Debt Instrument [Line Items] | |||||
| Gain on extinguishment of debt | $ 54 | $ 119 | $ 0 | $ 8 | |
| Repurchased face amount | 219 | ||||
| Notes and Debt Instruments | |||||
| Debt Instrument [Line Items] | |||||
| Gain on extinguishment of debt | $ 34 | ||||
| Senior Notes | 4.250% Senior Notes Due 2028 | |||||
| Debt Instrument [Line Items] | |||||
| Stated interest rate | 4.25% | 4.25% | |||
| Repurchased face amount | $ 34 | ||||
| Senior Notes | 3.625% Senior Notes Due 2029 | |||||
| Debt Instrument [Line Items] | |||||
| Stated interest rate | 3.625% | ||||
| Repurchased face amount | $ 81 | ||||
| Senior Notes | 3.750% Senior Notes Due 2029 | |||||
| Debt Instrument [Line Items] | |||||
| Stated interest rate | 3.75% | ||||
| Repurchased face amount | $ 86 | ||||
| Senior Notes | 3.875% Senior Notes Due 2029 | |||||
| Debt Instrument [Line Items] | |||||
| Stated interest rate | 3.875% | ||||
| Repurchased face amount | $ 18 | ||||
Long-Term Debt - Debt Modification Transactions (Details) - USD ($) |
Dec. 31, 2024 |
Nov. 30, 2024 |
Mar. 31, 2024 |
Dec. 31, 2023 |
Apr. 17, 2023 |
Mar. 31, 2023 |
|---|---|---|---|---|---|---|
| Debt Instrument [Line Items] | ||||||
| Aggregate principal amount | $ 7,548,000,000 | |||||
| Senior Notes | ||||||
| Debt Instrument [Line Items] | ||||||
| Aggregate principal amount | $ 357,000,000 | $ 324,000,000 | ||||
| Senior Notes | Lumen | ||||||
| Debt Instrument [Line Items] | ||||||
| Aggregate principal amount | $ 19,000,000 | $ 1,535,000,000 | ||||
| Senior Notes | 10.500% Senior Secured Notes Due 2030 | ||||||
| Debt Instrument [Line Items] | ||||||
| Aggregate principal amount | $ 9,000,000 | $ 915,000,000 | ||||
| Stated interest rate | 10.50% | 10.50% | 10.50% |
Long-Term Debt - Guarantees (Details) $ in Millions |
Mar. 22, 2024
USD ($)
|
|---|---|
| Financial Guarantee | |
| Debt Instrument [Line Items] | |
| Maximum guaranteed amount | $ 150 |
Long-Term Debt - Letters of Credit (Details) - USD ($) $ in Millions |
Dec. 31, 2024 |
Dec. 31, 2023 |
|---|---|---|
| Letter of credit | ||
| Debt Instrument [Line Items] | ||
| Letters of credit outstanding | $ 2 | $ 2 |
Long-Term Debt - Supplier Finance Program, Additional Information (Details) - USD ($) $ in Millions |
Dec. 31, 2024 |
Dec. 31, 2023 |
|---|---|---|
| Debt Disclosure [Abstract] | ||
| Period of installment payments | 5 years | |
| Annual interest on unpaid balances (as a percent) | 1.25% | |
| Credits | $ 24 | $ 15 |
| Current obligations | $ 21 | $ 16 |
| Supplier Finance Program, Obligation, Current, Statement of Financial Position [Extensible Enumeration] | Current maturities of long-term debt | Current maturities of long-term debt |
| Noncurrent obligations | $ 18 | $ 39 |
| Supplier Finance Program, Obligation, Noncurrent, Statement of Financial Position [Extensible Enumeration] | LONG-TERM DEBT | LONG-TERM DEBT |
Long-Term Debt - Changes in Supplier Finance Program (Details) - USD ($) $ in Millions |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2024 |
Dec. 31, 2023 |
Dec. 31, 2022 |
|
| Supplier Finance Program, Obligation [Roll Forward] | |||
| Balance at beginning of period | $ 55 | $ 67 | |
| Liabilities settled | (16) | (12) | |
| Balance at end of period | $ 39 | $ 55 | |
| Supplier Finance Program, Obligation, Statement of Financial Position [Extensible Enumeration] | LONG-TERM DEBT, Current maturities of long-term debt | ||
Long-Term Debt - Interest Expense (Details) - USD ($) $ in Millions |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2024 |
Dec. 31, 2023 |
Dec. 31, 2022 |
|
| Debt Disclosure [Abstract] | |||
| Gross interest expense | $ 855 | $ 480 | $ 390 |
| Capitalized interest | (36) | (22) | (16) |
| Total interest expense | 819 | $ 458 | $ 374 |
| Increase in outstanding long-term debt | $ 780 | ||
Long-Term Debt - Covenants (Details) |
12 Months Ended |
|---|---|
Dec. 31, 2024 | |
| Debt Disclosure [Abstract] | |
| Redemption price, percentage | 101.00% |
Long-Term Debt - Subsequent Events (Details) $ in Millions |
Feb. 15, 2025
USD ($)
|
|---|---|
| Subsequent event | Senior Notes | |
| Debt Instrument [Line Items] | |
| Aggregate principal amount redeemed | $ 70 |
Accounts Receivable - Schedule of Accounts Receivable (Details) - USD ($) $ in Millions |
Dec. 31, 2024 |
Dec. 31, 2023 |
|---|---|---|
| Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
| Total accounts receivable | $ 544 | $ 558 |
| Other receivables | 2 | 1 |
| Less: allowance for credit losses | (12) | (13) |
| Accounts receivable, less allowance | 532 | 545 |
| Trade receivables | ||
| Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
| Total accounts receivable | 457 | 435 |
| Earned and unbilled receivables | ||
| Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
| Total accounts receivable | $ 85 | $ 122 |
Property, Plant, and Equipment - Additional information (Details) - USD ($) $ in Millions |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2024 |
Dec. 31, 2023 |
Dec. 31, 2022 |
|
| Property, Plant and Equipment [Abstract] | |||
| Depreciation expense | $ 676 | $ 686 | $ 790 |
| Property, Plant and Equipment [Line Items] | |||
| Impairment of long-lived assets | 83 | $ 9 | $ 3 |
| Office Building | |||
| Property, Plant and Equipment [Line Items] | |||
| Impairment of long-lived assets | $ 80 | ||
Property, Plant and Equipment - Asset Retirement Obligations (Details) - USD ($) $ in Millions |
12 Months Ended | |
|---|---|---|
Dec. 31, 2024 |
Dec. 31, 2023 |
|
| Asset Retirement Obligation, Roll Forward Analysis [Roll Forward] | ||
| Balance at beginning of period | $ 94 | $ 85 |
| Accretion expense | 6 | 4 |
| Liabilities settled | (10) | (6) |
| Change in estimate | 7 | 11 |
| Balance at end of period | $ 97 | $ 94 |
Severance - Additional Information (Details) - Severance - Workforce Reduction $ in Millions |
1 Months Ended |
|---|---|
|
Apr. 30, 2024
USD ($)
| |
| Restructuring Cost and Reserve [Line Items] | |
| Percentage of workforce eliminated | 7.00% |
| Restructuring costs | $ 37 |
Severance - Change in Accrued Liabilities for Severance Expenses (Details) - USD ($) $ in Millions |
12 Months Ended | |
|---|---|---|
Dec. 31, 2024 |
Dec. 31, 2023 |
|
| Restructuring Reserve [Roll Forward] | ||
| Restructuring Charges, Statement of Income or Comprehensive Income [Extensible Enumeration] | Selling, General and Administrative Expense | Selling, General and Administrative Expense |
| Severance | ||
| Restructuring Reserve [Roll Forward] | ||
| Balance at beginning of period | $ 13 | $ 1 |
| Accrued to expense | 45 | 34 |
| Payments, net | (53) | (22) |
| Balance at end of period | $ 5 | $ 13 |
Employee Benefits (Details) - USD ($) $ in Millions |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2024 |
Dec. 31, 2023 |
Dec. 31, 2022 |
|
| Retirement Benefits [Abstract] | |||
| Defined contribution plan, cost | $ 30 | $ 32 | $ 31 |
| Fair value of plan assets | 37 | 40 | |
| Benefit obligation | 35 | 39 | |
| Funded status | $ 2 | $ 1 | |
Fair Value of Financial Instruments (Details) - USD ($) $ in Millions |
Dec. 31, 2024 |
Dec. 31, 2023 |
|---|---|---|
| Level 2 | Carrying Amount | ||
| Liabilities measured on a recurring basis | ||
| Liabilities-Long-term debt, excluding finance leases and other obligations | $ 9,436 | $ 8,724 |
| Level 2 | Fair Value | ||
| Liabilities measured on a recurring basis | ||
| Liabilities-Long-term debt, excluding finance leases and other obligations | 9,716 | 6,418 |
| Level 3 | Carrying Amount | ||
| Liabilities measured on a recurring basis | ||
| Indemnifications related to the sale of the Latin American business(1) | 87 | 86 |
| Level 3 | Fair Value | ||
| Liabilities measured on a recurring basis | ||
| Indemnifications related to the sale of the Latin American business(1) | $ 84 | $ 86 |
Income Taxes - Components of Income Tax (Benefit) Expense (Details) - USD ($) $ in Millions |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2024 |
Dec. 31, 2023 |
Dec. 31, 2022 |
|
| Federal | |||
| Current | $ 0 | $ (1) | $ 0 |
| Deferred | (44) | (9) | 271 |
| State and local | |||
| Current | 15 | 8 | 21 |
| Deferred | 0 | (11) | 4 |
| Foreign | |||
| Current | 2 | 1 | 26 |
| Deferred | (8) | 10 | (66) |
| Total income tax (benefit) expense | $ (35) | $ (2) | $ 256 |
Income Taxes - Allocation of Income Tax Expense (Details) - USD ($) $ in Millions |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2024 |
Dec. 31, 2023 |
Dec. 31, 2022 |
|
| Income tax (benefit) expense in the consolidated statements of operations: | |||
| Attributable to income | $ (35) | $ (2) | $ 256 |
| Member's equity: | |||
| Tax effect of the change in accumulated other comprehensive loss | $ 0 | $ 3 | $ (58) |
Income Taxes - Reconciliation of Statutory Federal Income Tax Rate (Details) |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2024 |
Dec. 31, 2023 |
Dec. 31, 2022 |
|
| Income Tax Disclosure [Abstract] | |||
| Statutory federal income tax rate | 21.00% | 21.00% | 21.00% |
| State income taxes, net of federal income tax benefit | 3.80% | 0.30% | (0.30%) |
| Change in liability for unrecognized tax position | (27.80%) | 0.00% | 0.40% |
| Goodwill impairment | 0.00% | (19.40%) | (21.40%) |
| Divestiture of business | (19.40%) | (2.50%) | (5.10%) |
| Change in valuation allowance | 34.40% | 0.00% | (0.60%) |
| Net foreign income tax | (0.10%) | 0.00% | 0.20% |
| Research and development credits | 1.40% | 0.10% | 0.10% |
| Other, net | (2.00%) | 0.60% | 0.10% |
| Effective income tax rate | 11.30% | 0.10% | (5.60%) |
Income Taxes - Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Millions |
Dec. 31, 2024 |
Dec. 31, 2023 |
|---|---|---|
| Deferred tax assets | ||
| Net operating loss carry forwards | $ 1,319 | $ 1,598 |
| Other | 604 | 575 |
| Gross deferred tax assets | 1,923 | 2,173 |
| Less valuation allowance | (126) | (248) |
| Net deferred tax assets | 1,797 | 1,925 |
| Deferred tax liabilities | ||
| Property, plant and equipment | (1,216) | (1,189) |
| Intangible assets | (858) | (1,063) |
| Other | (6) | (9) |
| Gross deferred tax liabilities | (2,080) | (2,261) |
| Net deferred tax liabilities | $ (283) | $ (336) |
Income Taxes - Unrecognized Tax Benefits (Details) - USD ($) $ in Millions |
12 Months Ended | |
|---|---|---|
Dec. 31, 2024 |
Dec. 31, 2023 |
|
| Unrecognized Tax Benefits [Roll Forward] | ||
| Unrecognized tax benefits at beginning of period | $ 799 | $ 813 |
| Decrease in tax positions of current year netted against deferred tax assets | (24) | (50) |
| Increase in tax positions of prior periods netted against deferred tax assets | 91 | 43 |
| Decreases related to divestitures of businesses | 0 | (2) |
| Decrease from the lapse of statute of limitations | (15) | (5) |
| Unrecognized tax benefits at end of period | $ 851 | $ 799 |
Geographic and Customer Concentrations - Revenue from Geographical Region (Details) - USD ($) $ in Millions |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2024 |
Dec. 31, 2023 |
Dec. 31, 2022 |
|
| Disaggregation of Revenue [Line Items] | |||
| Total operating revenue | $ 6,496 | $ 7,037 | $ 7,493 |
| North America | |||
| Disaggregation of Revenue [Line Items] | |||
| Total operating revenue | 6,331 | 6,345 | 6,256 |
| Europe, Middle East and Africa | |||
| Disaggregation of Revenue [Line Items] | |||
| Total operating revenue | 118 | 628 | 734 |
| Latin America | |||
| Disaggregation of Revenue [Line Items] | |||
| Total operating revenue | $ 47 | $ 64 | $ 503 |
Geographic and Customer Concentrations - Additional Information (Details) |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2024 |
Dec. 31, 2023 |
Dec. 31, 2022 |
|
| Revenue Benchmark | Customer Concentration Risk | Top 10 Customers | |||
| Disaggregation of Revenue [Line Items] | |||
| Concentration risk, percentage | 20.00% | 18.00% | 15.00% |
Commitments, Contingencies and Other Items - Additional Information (Details) $ in Thousands |
12 Months Ended | |
|---|---|---|
|
Dec. 31, 2024
USD ($)
patent
|
Dec. 31, 2023
USD ($)
|
|
| Loss Contingencies | ||
| Estimated tax and litigation liability | $ 36,000 | $ 38,000 |
| Patents allegedly infringed | patent | 1 | |
| Purchase commitment | $ 205,000 | |
| Purchase obligation, due in 2025 | 70,000 | |
| Purchase obligation, due in 2026 through 2027 | 68,000 | |
| Purchase obligation, due in 2028 through 2029 | 25,000 | |
| Purchase obligation, due in 2030 and thereafter | 42,000 | |
| Unfavorable Regulatory Action | ||
| Loss Contingencies | ||
| Estimate of possible loss | $ 300 |
Commitments, Contingencies and Other Items - Right-of-Way Agreements (Details) - Future Rental Commitments and Right-of-Way $ in Millions |
Dec. 31, 2024
USD ($)
|
|---|---|
| Other Commitments [Line Items] | |
| 2025 | $ 117 |
| 2026 | 43 |
| 2027 | 42 |
| 2028 | 41 |
| 2029 | 30 |
| 2030 and thereafter | 291 |
| Total future minimum payments | $ 564 |
Other Financial Information (Details) - USD ($) $ in Millions |
12 Months Ended | |
|---|---|---|
Dec. 31, 2024 |
Dec. 31, 2023 |
|
| Condensed Consolidating Financial Information | ||
| Capital expenditures included in accounts payable | $ 106 | $ 94 |
| Prepaid Expense and Other Assets, Current [Abstract] | ||
| Prepaid expenses | 108 | 123 |
| Contract assets | 10 | 6 |
| Assets held for sale | 23 | 12 |
| Other | 7 | 13 |
| Total other current assets | 246 | 244 |
| Fulfillment Costs | ||
| Prepaid Expense and Other Assets, Current [Abstract] | ||
| Contract costs | 57 | 50 |
| Acquisition Costs | ||
| Prepaid Expense and Other Assets, Current [Abstract] | ||
| Contract costs | $ 41 | $ 40 |