LEVEL 3 PARENT, LLC, 10-Q filed on 11/4/2021
Quarterly Report
v3.21.2
Cover Page
 9 Months Ended
Sep. 30, 2021
shares
Cover [Abstract]  
Document Type 10-Q
Document Quarterly Report true
Document Period End Date Sep. 30, 2021
Document Transition Report false
Entity File Number 001-35134
Entity Registrant Name LEVEL 3 PARENT, LLC
Entity Incorporation, State or Country Code DE
Entity Tax Identification Number 47-0210602
Entity Address, Address Line One 1025 Eldorado Blvd.,
Entity Address, City or Town Broomfield,
Entity Address, State or Province CO
Entity Address, Postal Zip Code 80021-8869
City Area Code 720
Local Phone Number 888-1000
Entity Current Reporting Status Yes
Entity Interactive Data Current Yes
Entity Filer Category Non-accelerated Filer
Entity Small Business false
Entity Emerging Growth Company false
Entity Shell Company false
Entity Common Stock, Shares Outstanding 0
Entity Central Index Key 0000794323
Amendment Flag false
Current Fiscal Year End Date --12-31
Document Fiscal Year Focus 2021
Document Fiscal Period Focus Q3
v3.21.2
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($)
$ in Millions
 3 Months Ended 9 Months Ended
Sep. 30, 2021
Sep. 30, 2020
Sep. 30, 2021
Sep. 30, 2020
OPERATING REVENUE        
Operating revenues $ 1,990 $ 1,971 $ 5,964 $ 5,935
OPERATING EXPENSES        
Cost of services and products (exclusive of depreciation and amortization) 897 857 2,643 2,623
Selling, general and administrative 305 300 872 922
Operating expenses - affiliates 116 101 354 274
Depreciation and amortization 431 429 1,304 1,250
Total operating expenses 1,749 1,687 5,173 5,069
OPERATING INCOME 241 284 791 866
OTHER (EXPENSE) INCOME        
Interest income - affiliate 16 13 49 39
Interest expense (90) (99) (272) (301)
Other (expense) income, net (9) 41 1 29
Total other expense, net (83) (45) (222) (233)
INCOME BEFORE INCOME TAXES 158 239 569 633
Income tax expense 37 42 150 147
NET INCOME 121 197 419 486
Non-Affiliate Revenue        
OPERATING REVENUE        
Operating revenues 1,934 1,918 5,797 5,782
Affiliate Services        
OPERATING REVENUE        
Operating revenues $ 56 $ 53 $ 167 $ 153
v3.21.2
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) - USD ($)
$ in Millions
 3 Months Ended 9 Months Ended
Sep. 30, 2021
Sep. 30, 2020
Sep. 30, 2021
Sep. 30, 2020
Statement of Comprehensive Income [Abstract]        
NET INCOME $ 121 $ 197 $ 419 $ 486
OTHER COMPREHENSIVE (LOSS) INCOME        
Foreign currency translation adjustments, net of $13, $(21), $16 and $(2) tax (93) 41 (101) (179)
Other comprehensive (loss) income, net of tax (93) 41 (101) (179)
COMPREHENSIVE INCOME $ 28 $ 238 $ 318 $ 307
v3.21.2
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) (Parenthetical) - USD ($)
$ in Millions
 3 Months Ended 9 Months Ended
Sep. 30, 2021
Sep. 30, 2020
Sep. 30, 2021
Sep. 30, 2020
Statement of Comprehensive Income [Abstract]        
Foreign currency translation adjustments, tax effect $ 13 $ (21) $ 16 $ (2)
v3.21.2
CONSOLIDATED BALANCE SHEETS - USD ($)
$ in Millions
Sep. 30, 2021
Dec. 31, 2020
CURRENT ASSETS    
Cash and cash equivalents $ 215 $ 190
Accounts receivable, less allowance of $39 and $45 620 683
Note receivable - affiliate 1,468 1,468
Assets held for sale 2,657 0
Other 238 297
Total current assets 5,198 2,638
Property, plant and equipment, net of accumulated depreciation of $2,998 and $2,818 9,011 10,518
GOODWILL AND OTHER ASSETS    
Goodwill 6,667 7,405
Other intangible assets, net 5,907 6,605
Other, net 1,459 1,410
Total goodwill and other assets 14,033 15,420
TOTAL ASSETS 28,242 28,576
CURRENT LIABILITIES    
Current maturities of long-term debt 24 14
Accounts payable 407 495
Accounts payable - affiliates 76 869
Accrued expenses and other liabilities    
Salaries and benefits 166 220
Income and other taxes 98 111
Current operating lease liabilities 283 241
Other 143 159
Liabilities held for sale 412 0
Current portion of deferred revenue 289 315
Total current liabilities 1,898 2,424
LONG-TERM DEBT 10,402 10,373
DEFERRED REVENUE AND OTHER LIABILITIES    
Deferred revenue 1,335 1,396
Operating lease liabilities 942 903
Other 468 575
Total deferred revenue and other liabilities 2,745 2,874
COMMITMENTS AND CONTINGENCIES (Note 10)
MEMBER'S EQUITY    
Member's equity 13,532 13,139
Accumulated other comprehensive loss (335) (234)
Total member's equity 13,197 12,905
TOTAL LIABILITIES AND MEMBER'S EQUITY $ 28,242 $ 28,576
v3.21.2
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)
$ in Millions
Sep. 30, 2021
Dec. 31, 2020
Statement of Financial Position [Abstract]    
Allowance for doubtful accounts $ 39 $ 45
Accumulated depreciation $ 2,998 $ 2,818
v3.21.2
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($)
$ in Millions
 3 Months Ended 9 Months Ended
Sep. 30, 2021
Sep. 30, 2020
Sep. 30, 2021
Sep. 30, 2020
OPERATING ACTIVITIES        
Net income $ 121 $ 197 $ 419 $ 486
Adjustments to reconcile net income to net cash provided by operating activities:        
Depreciation and amortization 431 429 1,304 1,250
Deferred income taxes     122 124
Changes in current assets and liabilities:        
Accounts receivable     (41) (101)
Accounts payable     (34) (139)
Other assets and liabilities, net     (74) (195)
Other assets and liabilities, affiliate     (780) 364
Changes in other noncurrent assets and liabilities, net     33 116
Other, net     (8) 39
Net cash provided by operating activities     941 1,944
INVESTING ACTIVITIES        
Capital expenditures     (874) (1,124)
Collections on note receivable - affiliate     0 122
Proceeds from sale of property, plant and equipment and other assets     52 105
Net cash used in investing activities     (822) (897)
FINANCING ACTIVITIES        
Net proceeds from issuance of long-term debt     891 2,020
Distributions     (25) (1,075)
Payments of long-term debt     (932) (2,056)
Other     (1) (4)
Net cash used in financing activities     (67) (1,115)
Net increase (decrease) in cash, cash equivalents and restricted cash     52 (68)
Cash, cash equivalents and restricted cash at beginning of period     205 338
Cash, cash equivalents and restricted cash at end of period 257 270 257 270
Supplemental cash flow information:        
Income taxes paid, net     (23) (20)
Interest paid (net of capitalized interest of $11 and $18)     (304) (323)
Cash, cash equivalents and restricted cash:        
Cash and cash equivalents 215 256 215 256
Cash and cash equivalents included in assets held for sale 36 0 36 0
Restricted cash included in Other current assets 2 2 2 2
Restricted cash included in Other, net noncurrent assets 4 12 4 12
Total $ 257 $ 270 $ 257 $ 270
v3.21.2
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (Parenthetical) - USD ($)
$ in Millions
 9 Months Ended
Sep. 30, 2021
Sep. 30, 2020
Statement of Cash Flows [Abstract]    
Capitalized interest $ 11 $ 18
v3.21.2
CONSOLIDATED STATEMENTS OF MEMBER'S EQUITY (UNAUDITED) - USD ($)
$ in Millions
Total
MEMBER'S EQUITY
MEMBER'S EQUITY
Cumulative Effect, Period of Adoption, Adjustment
ACCUMULATED OTHER COMPREHENSIVE LOSS
Balance at beginning of period at Dec. 31, 2019   $ 13,724 $ (3) $ (179)
MEMBER'S EQUITY        
Net income $ 486 486    
Distributions   (1,118)    
Other   7    
Other comprehensive (loss) income (179)     (179)
Balance at end of period at Sep. 30, 2020 12,738 13,096   (358)
Balance at beginning of period at Jun. 30, 2020   13,301   (399)
MEMBER'S EQUITY        
Net income 197 197    
Distributions   (400)    
Other   (2)    
Other comprehensive (loss) income 41     41
Balance at end of period at Sep. 30, 2020 12,738 13,096   (358)
Balance at beginning of period at Dec. 31, 2020 12,905 13,139   (234)
MEMBER'S EQUITY        
Net income 419 419    
Distributions   (25)    
Other   (1)    
Other comprehensive (loss) income (101)     (101)
Balance at end of period at Sep. 30, 2021 13,197 13,532   (335)
Balance at beginning of period at Jun. 30, 2021   13,412   (242)
MEMBER'S EQUITY        
Net income 121 121    
Distributions   0    
Other   (1)    
Other comprehensive (loss) income (93)     (93)
Balance at end of period at Sep. 30, 2021 $ 13,197 $ 13,532   $ (335)
v3.21.2
CONSOLIDATED STATEMENTS OF MEMBER'S EQUITY (UNAUDITED) (Parenthetical) - USD ($)
$ in Millions
 3 Months Ended 9 Months Ended 12 Months Ended
Sep. 30, 2021
Sep. 30, 2020
Sep. 30, 2021
Sep. 30, 2020
Dec. 31, 2019
Income tax expense (benefit) $ 37 $ 42 $ 150 $ 147  
MEMBER'S EQUITY | Cumulative Effect, Period of Adoption, Adjustment          
Income tax expense (benefit)         $ (2)
v3.21.2
Background
 9 Months Ended
Sep. 30, 2021
Accounting Policies [Abstract]  
Background Background
General

We are an international facilities-based technology communications provider (that is, a provider that owns or leases a substantial portion of the property, plant and equipment necessary to provide our services) of a broad range of integrated communications services. We created our communications network by constructing our own assets and through a combination of purchasing other companies and purchasing or leasing facilities from others. We designed our network to provide communications services that employ and take advantage of rapidly improving underlying optical, Internet Protocol, computing and storage technologies.

Basis of Presentation

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

The accompanying consolidated financial statements include our accounts and the accounts of our subsidiaries 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. Due to exchange restrictions and other conditions, effective at the end of the third quarter of 2015 we deconsolidated our Venezuelan subsidiary and began accounting for our investment in our Venezuelan subsidiary using the cost method of accounting. The factors that led to our conclusions at the end of the third quarter of 2015 continued to exist through the third quarter of 2021.

We reclassified certain prior period amounts to conform to the current period presentation, including our revenue by product and service categories. See Note 4—Revenue Recognition for additional information. These changes had no impact on total operating revenue, total operating expenses or net income for any period.

Operating lease assets are included in other, net under goodwill and other assets on our consolidated balance sheets. Other, net included affiliate operating lease assets of $243 million and $83 million as of September 30, 2021 and December 31, 2020, respectively. Additionally, current operating lease liabilities included the current portion of affiliate operating lease liabilities of $67 million and $31 million as of September 30, 2021 and December 31, 2020, respectively, and operating lease liabilities included the noncurrent portion of affiliate operating lease liabilities of $187 million and $65 million as of September 30, 2021 and December 31, 2020, respectively.
Segments

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

Summary of Significant Accounting Policies

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

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. Unless otherwise specified, the amounts and information in the notes presented do not include assets and liabilities that have been reclassified as held for sale as of September 30, 2021. See Note 2—Planned Divestiture of the Latin American Business for additional information.

Recently Adopted Accounting Pronouncements

Debt

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

Investments

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

Income Taxes

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

We adopted ASU 2016-13, "Measurement of Credit Losses on Financial Instruments" ("ASU 2016-13") on January 1, 2020 and recognized a cumulative adjustment to our accumulated deficit as of the date of adoption of $3 million, net of tax effect of $2 million. Please refer to Note 6—Credit Losses on Financial Instruments for more information.


Recently Issued Accounting Pronouncements

In March 2020, the FASB issued ASU 2020-04, "Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting" ("ASU 2020-04" or "Reference Rate Reform"), designed to ease the burden of accounting for contract modifications related to the global market-wide reference rate transition period. Subject to certain criteria, ASU 2020-04 provides qualifying entities the option to apply expedients and exceptions to contract modifications and hedging accounting relationships made until December 31, 2022. These amendments are effective immediately and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022. ASU 2020-04 provides optional guidance for a limited time to ease the potential burden in accounting for reference rate reform. Based on our review of our key material contracts through September 30, 2021, we do not expect ASU 2020-04 to have any material impact on the consolidated financial statements.
v3.21.2
Planned Divestiture of Latin American Business
 9 Months Ended
Sep. 30, 2021
Discontinued Operations and Disposal Groups [Abstract]  
Planned Divestiture of Latin American Business Planned Divestiture of the Latin American Business
On July 25, 2021, affiliates of Level 3 Parent, LLC executed a definitive agreement to divest our Latin American business to an affiliate of a fund advised by Stonepeak Partners LP in exchange for $2.7 billion cash, subject to certain working capital and other purchase price adjustments and related transaction expenses (estimated to be approximately $50 million). We expect to close the transaction in the first half of 2022, upon receipt of all requisite regulatory approvals in the U.S. and certain countries where the Latin American business operates, as well as the satisfaction of other customary conditions.

The actual amount of our net after-tax proceeds from this divestiture could vary substantially from the amounts we currently estimate, particularly if we experience delays in completing the transaction or if there are changes in other assumptions that impact our estimates.

We do not believe this divestiture transaction represents a strategic shift for Level 3. Therefore, the Latin American business does not meet the criteria to be classified as a discontinued operation. As a result, we will continue to report our operating results for the Latin American business in our consolidated operating results until the transaction is closed. The pre-tax net income of the Latin American business is estimated to be as follows in the table below:

Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
LowHighLowHighLowHighLowHigh
(Dollars in millions)
Pre-tax net income $59 72 36 45 $131 160 108 131 

As of September 30, 2021 in the accompanying consolidated balance sheets, the assets and liabilities of our Latin American business (the "disposal group") are classified as held for sale and are measured at the lower of (i) the carrying value when we classified the disposal group as held for sale and (ii) the fair value of the disposal group less costs to sell. Effective with the designation of the disposal group as held for sale on July 25, 2021, 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. We estimate that we would have recorded an additional $26 million of depreciation, intangible amortization, and amortization of right-of use assets for the three and nine months ended September 30, 2021 if the Latin American business did not meet the held for sale criteria.
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 did not record any estimated loss on disposal during the nine months ended September 30, 2021. The recoverability of the disposal group will be evaluated each reporting period until the closing of the transaction.

The principal components of the held for sale assets and liabilities as of September 30, 2021 are as follows:

September 30, 2021
(Dollars in millions)
Assets held for sale
Cash and cash equivalents$36 
Accounts receivable, less allowance of $3
83 
Other current assets75 
Property, plant and equipment, net accumulated depreciation of $445
1,545 
Goodwill (1)
718 
Customer relationships and other intangibles, net129 
Other non-current assets71 
Total assets held for sale$2,657 
Liabilities held for sale
Accounts payable$76 
Salaries and benefits22 
Income and other taxes32 
Current portion of deferred revenue28 
Other current liabilities10 
Deferred income taxes, net116 
Other non-current liabilities128 
Total liabilities held for sale$412 
______________________________________________________________________
(1)    The assignment of goodwill was based on the relative fair value of the disposal group compared to the fair value of the total Company prior to being reclassified as held for sale.
v3.21.2
Goodwill, Customer Relationships and Other Intangible Assets
 9 Months Ended
Sep. 30, 2021
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill, Customer Relationships and Other Intangible Assets Goodwill, Customer Relationships and Other Intangible Assets
Goodwill, customer relationships and other intangible assets consisted of the following:
September 30, 2021December 31, 2020
(Dollars in millions)
Goodwill$6,667 7,405 
Customer relationships, less accumulated amortization of $2,617 and $2,246
$5,487 6,156 
Capitalized software, less accumulated amortization of $322 and $256
387 401 
Trade names, less accumulated amortization of $98 and $83
33 48 
Total other intangible assets, net$5,907 6,605 

Our goodwill was derived from Lumen's acquisition of us where the purchase price exceeded the fair value of the net assets acquired.
We assess our goodwill for impairment annually, or, under certain circumstances, more frequently, such as when events or changes in circumstances indicate there may be impairment. We are required to write down the value of goodwill only when our assessment determines the carrying value of equity of our reporting unit exceeds its fair value. Our annual impairment assessment date for goodwill is October 31, at which date we assess goodwill at our reporting unit. In reviewing the criteria for reporting units, we have determined that we are one reporting unit.

The reclassification of held for sale assets, as described in Note 2—Planned Divestiture of the Latin American Business, was considered an event or change in circumstance which required an assessment of our goodwill for impairment as of July 31, 2021. We performed a pre-reclassification goodwill impairment test to determine whether there was an impairment prior to the reclassification and to determine the July 31, 2021 fair values to be utilized for goodwill allocation to the disposal group to be reclassified as assets held for sale. We concluded it is more likely than not that the fair value of our reporting unit exceeded the carrying value of equity of our reporting unit at July 31, 2021. We also performed a post-reclassification goodwill impairment test using our estimated post-divestiture cash flows and carrying value of equity to evaluate whether the fair value of our reporting unit that will remain following the divestiture exceeds the carrying value of the equity of the reporting unit after reclassification of assets held for sale.

At July 31, 2021, we estimated the fair value of equity by considering both a market approach and a discounted cash flow methodology. The market approach includes the use of comparable multiples of publicly traded companies whose services are comparable to ours. The discounted cash flow methodology 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 July 31, 2021, based on our assessment performed, the estimated fair value of our equity exceeded our carrying value of equity by approximately 17%. We concluded that we did not have any impairment as of July 31, 2021.


The following table shows the rollforward of goodwill from December 31, 2020 through September 30, 2021:
(Dollars in millions)
As of December 31, 2020 (1)
$7,405 
Reclassified as held for sale (2)
(718)
Effect of foreign currency exchange rate changes(20)
As of September 30, 2021 (1)
$6,667 
_______________________________________________________________________________
(1)Goodwill at September 30, 2021 and December 31, 2020 is net of accumulated impairment loss of $3.6 billion and $3.7 billion, respectively. The change in accumulated impairment losses at September 30, 2021 is a result of amounts reclassified to held for sale related to our planned divestiture.
(2)Represents the amount of goodwill, net of accumulated impairment loss reclassified as held for sale related to our planned divestiture. See Note 2—Planned Divestiture of the Latin American Business.

Total amortization expense for intangible assets for both the three months ended September 30, 2021 and 2020 totaled $210 million, and for the nine months ended September 30, 2021 and 2020 totaled $637 million and $626 million, respectively. As of September 30, 2021, the gross carrying amount of goodwill, customer relationships, capitalized software, indefinite-life and other intangible assets was $15.6 billion.
We estimate that total amortization expense for intangible assets for the years ending December 31, 2021 through 2025 will be as provided in the table below. As a result of reclassifying our disposal group as being held for sale on our September 30, 2021 consolidated balance sheet, the amounts presented below do not include the future amortization of the intangible assets for the disposal group. See Note 2—Planned Divestiture of the Latin American Business for more information.
(Dollars in millions)
2021 (remaining three months)$200 
2022736 
2023708 
2024704 
2025689 
v3.21.2
Revenue Recognition
 9 Months Ended
Sep. 30, 2021
Revenue from Contract with Customer [Abstract]  
Revenue Recognition Revenue Recognition
Beginning in the first quarter of 2021, we categorize our products, services and revenue among the following categories:
•Compute and Application Services, which include our Edge Cloud services, IT solutions, Unified Communications and Collaboration ("UC&C"), data center, content delivery network ("CDN") and Managed Security services;
•IP and Data Services, which include Ethernet, IP, and VPN data networks, including software-defined wide area networks ("SD WAN") based services, Dynamic Connections and Hyper WAN;
•Fiber Infrastructure Services, which include dark fiber, optical services and equipment;
•Voice and Other, which include Time Division Multiplexing ("TDM") voice, private line and other legacy services; and
•Affiliate Services, which include communications services provided to our affiliates that we also provide to our external customers.
Disaggregated Revenue by Service Offering

The following tables provide disaggregation of revenue from contracts with customers based on service offering for the three and nine months ended September 30, 2021 and 2020. It also shows the amount of revenue that is not subject to ASC 606, "Revenue from Contracts with Customers" ("ASC 606"), but is instead governed by other accounting standards:
Three Months Ended September 30, 2021Three Months Ended September 30, 2020
Total Revenue
Adjustments for Non-ASC 606 Revenue (1)
Total Revenue from Contracts with CustomersTotal Revenue
Adjustments for Non-ASC 606 Revenue (1)
Total Revenue from Contracts with Customers
(Dollars in millions)
Compute and Application Services$287 (126)161 274 (124)150 
IP and Data Services890 — 890 878 — 878 
Fiber Infrastructure Services412 (56)356 379 (55)324 
Voice and Other345 (3)342 387 (2)385 
Affiliate Services56 (56)— 53 (53)— 
Total revenue$1,990 (241)1,749 1,971 (234)1,737 
Nine Months Ended September 30, 2021Nine Months Ended September 30, 2020
Total Revenue
Adjustments for Non-ASC 606 Revenue (1)
Total Revenue from Contracts with CustomersTotal Revenue
Adjustments for Non-ASC 606 Revenue (1)
Total Revenue from Contracts with Customers
(Dollars in millions)
Compute and Application Services$850 (380)470 814 (371)443 
IP and Data Services2,659 — 2,659 2,639 — 2,639 
Fiber Infrastructure Services1,210 (164)1,046 1,116 (157)959 
Voice and Other1,078 (8)1,070 1,213 (6)1,207 
Affiliate Services167 (167)— 153 (153)— 
Total revenue$5,964 (719)5,245 5,935 (687)5,248 
_____________________________________________________________________
(1) Includes lease revenue which is not within the scope of ASC 606.

Operating Lease Income

We lease various dark fiber, office facilities, colocation facilities, switching facilities, other network sites and service equipment to third parties under operating leases. Lease and sublease revenue are included in operating revenue in our consolidated statements of operations.

For the three months ended September 30, 2021 and 2020, our gross rental income was $202 million and $197 million, respectively, which represents approximately 10% of our operating revenue for both periods. For the nine months ended September 30, 2021 and 2020, our gross rental income was $601 million and $565 million, respectively, which represents 10% of our operating revenue for both periods.

Customer Receivables and Contract Balances

The following table provides balances of customer receivables, contract assets and contract liabilities, net of amounts reclassified as held for sale as of September 30, 2021 and December 31, 2020:
September 30, 2021December 31, 2020
(Dollars in millions)
Customer receivables (1) (2)
$618 683 
Contract assets (3)
32 38 
Contract liabilities (4)
259 385 
_____________________________________________________________________
(1)Reflects gross customer receivables of $657 million and $728 million, net of allowance for credit losses of $39 million and $45 million, at September 30, 2021 and December 31, 2020, respectively.
(2)As of September 30, 2021, amount excludes customer receivables reclassified as held for sale of $82 million.
(3)As of September 30, 2021, no amounts have been reclassified as held for sale.
(4)As of September 30, 2021, amount excludes contract liabilities reclassified as held for sale of $62 million.
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 until we have satisfied the related performance obligation to the customer. Contract liabilities include recurring services billed one month in advance and installation and maintenance charges that are deferred and recognized over the actual or expected contract term, which typically ranges from one to five years depending on the service. Contract liabilities are included within deferred revenue and liabilities held for sale in our consolidated balance sheets. During the three and nine months ended September 30, 2021, we recognized $30 million and $151 million, respectively, of revenue that was included in contract liabilities as of January 1, 2021. During the three and nine months ended September 30, 2020, we recognized $29 million and $158 million, respectively, of revenue that was included in contract liabilities as of January 1, 2020.

Performance Obligations

As of September 30, 2021, our estimated revenue expected to be recognized in the future related to performance obligations associated with existing customer contracts that are partially or wholly unsatisfied is approximately $3.6 billion. We expect to recognize approximately 85% of this revenue through 2023, with the balance recognized thereafter.

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

Contract Costs

The following tables provide changes in our contract acquisition costs and fulfillment costs:
Three Months Ended September 30, 2021Three Months Ended September 30, 2020
Acquisition CostsFulfillment CostsAcquisition CostsFulfillment Costs
(Dollars in millions)
Beginning of period balance$75 124 77 122 
Costs incurred15 22 14 21 
Amortization(14)(21)(15)(22)
Reclassified as held for sale (1)
— (27)— — 
End of period balance$76 98 76 121 

Nine Months Ended September 30, 2021Nine Months Ended September 30, 2020
Acquisition CostsFulfillment CostsAcquisition CostsFulfillment Costs
(Dollars in millions)
Beginning of period balance$78 122 79 121 
Costs incurred44 68 44 65 
Amortization(46)(65)(47)(65)
Reclassified as held for sale (1)
— (27)— — 
End of period balance$76 98 76 121 
(1)Represents the amounts reclassified as held for sale related to our planned divestiture. See Note 2—Planned Divestiture of the Latin American 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.

Deferred acquisition and fulfillment costs are amortized based on the transfer of services on a straight-line basis over the average expected customer life of approximately 30 months for our business customers. Amortized fulfillment costs are included in cost of services and products, and amortized acquisition costs are included in selling, general and administrative expenses in our consolidated statements of operations. The amount of these deferred costs that are anticipated to be amortized in the next 12 months are included in other current assets on our consolidated balance sheets. The amount of deferred costs expected to be amortized beyond 12 months is included in other non-current assets on our consolidated balance sheets. Deferred acquisition and fulfillment costs are assessed for impairment on an annual basis.
v3.21.2
Leases
 9 Months Ended
Sep. 30, 2021
Leases [Abstract]  
Leases Leases
We primarily lease to or from third parties various office facilities and colocation facilities, equipment and dark fiber. Leases with an initial term of 12 months or less are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term.

During the third quarter of 2021, we rationalized our lease footprint and ceased using 13 leased property locations that were underutilized. We determined that we no longer needed the leased space and, due to the limited remaining term on the contracts, concluded that we had neither the intent nor ability to sublease the properties. For the both the three and nine month periods ending September 30, 2021, we incurred accelerated lease costs of approximately $15 million. In conjunction with our plans to continue to reduce costs, we expect to continue our real estate rationalization efforts and may incur additional costs in future periods.
Leases Leases
We primarily lease to or from third parties various office facilities and colocation facilities, equipment and dark fiber. Leases with an initial term of 12 months or less are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term.

During the third quarter of 2021, we rationalized our lease footprint and ceased using 13 leased property locations that were underutilized. We determined that we no longer needed the leased space and, due to the limited remaining term on the contracts, concluded that we had neither the intent nor ability to sublease the properties. For the both the three and nine month periods ending September 30, 2021, we incurred accelerated lease costs of approximately $15 million. In conjunction with our plans to continue to reduce costs, we expect to continue our real estate rationalization efforts and may incur additional costs in future periods.
v3.21.2
Credit Losses on Financial Instruments
 9 Months Ended
Sep. 30, 2021
Credit Loss [Abstract]  
Credit Losses on Financial Instruments Credit Losses on Financial Instruments
In accordance with ASC 326, "Financial Instruments - Credit Losses," we aggregate financial assets with similar risk characteristics to align our expected credit losses with the credit quality or deterioration over the life of such assets. We monitor certain risk characteristics within our aggregated financial assets and revise their composition accordingly, to the extent internal and external risk factors change each reporting period. Financial assets that do not share risk characteristics with other financial assets are evaluated separately. Our financial assets measured at amortized cost primarily consist of accounts receivable.

We use a loss rate method to estimate our allowance for credit losses. Our determination of the current expected credit loss rate begins with our use of historical loss experience as a percentage of accounts receivable. We measure our historical loss period based on the average days to recognize accounts receivable as credit losses. When asset specific characteristics and current conditions change from those in the historical period, due to changes in our credit and collections strategy, certain classes of aged balances, or credit loss and recovery policies, we perform a qualitative and quantitative assessment to adjust our historical loss rate. We use regression analysis to develop an expected loss rate using historical experience and economic data over a forecast period. We measure our forecast period based on the average days to collect payment on billed accounts receivable. To determine our current allowance for credit losses, we combine the historical and expected credit loss rates and apply them to our period end accounts receivable.

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

The assessment of the correlation between historical observed default rates, current conditions and forecasted economic conditions requires judgment. Alternative interpretations of these factors could have resulted in different conclusions regarding the allowance for credit losses. The amount of credit loss is sensitive to changes in circumstances and forecasted economic conditions. Our historical credit loss experience, current conditions and forecast of economic conditions may also not be representative of the customers' actual default experience in the future.
The following table presents the activity of our allowance for credit losses for our accounts receivable portfolio:
(Dollars in millions)
Beginning balance at December 31, 2020
$45 
Provision for expected losses14 
Write-offs charged against the allowance(21)
Recoveries collected4 
Reclassified as held for sale (1)
(3)
Ending balance at September 30, 2021
$39 
(1)Represents the amounts reclassified as held for sale related to our planned divestiture. See Note 2—Planned Divestiture of the Latin American Business.
v3.21.2
Long-Term Debt
 9 Months Ended
Sep. 30, 2021
Debt Disclosure [Abstract]  
Long-term Debt Long-Term Debt
The following chart reflects our consolidated long-term debt, including finance leases, unamortized discounts and premiums, net and unamortized debt issuance costs, but excluding intercompany debt:
Interest Rates (1)
Maturities (1)
September 30, 2021December 31, 2020
(Dollars in millions)
Level 3 Financing, Inc.
Senior Secured Debt: (2)
Senior notes
3.400% - 3.875%
2027 - 2029
$1,500 1,500 
Tranche B 2027 Term Loan (3) (5)
LIBOR + 1.75%
2027
3,111 3,111 
Senior Notes and other debt:
Senior notes (4)
3.625% - 5.375%
2025 - 2029
5,515 5,515 
Finance leases and other obligationsVariousVarious323 255 
Unamortized premiums, net36 60 
Unamortized debt issuance costs(59)(54)
Total long-term debt10,426 10,387 
Less current maturities(24)(14)
Long-term debt, excluding current maturities$10,402 10,373 
______________________________________________________________________
(1)As of September 30, 2021.
(2)See Note 6—Long-Term Debt in our Annual Report on Form 10-K for the year ended December 31, 2020 for a description of certain parent or subsidiary guarantees and liens securing this debt.
(3)The Tranche B 2027 Term Loan had an interest rate of 1.835% at September 30, 2021 and 1.897% at December 31, 2020.
(4)This debt is fully and unconditionally guaranteed by certain affiliates of Level 3 Financing, Inc., including Level 3 Parent, LLC and Level 3 Communications, LLC.
(5)See Note 1— Background for our considerations of the impact of Reference Rate Reform on our debt subject to rate reference changes from LIBOR.
New Issuances

On January 13, 2021, Level 3 Financing, Inc. issued $900 million aggregate principal amounts of its 3.750% Sustainability-Linked Senior Notes due 2029 (the "Sustainability-Linked Notes"). The net proceeds were used, together with cash on hand, to redeem certain of its outstanding senior note indebtedness. See "—Redemption of Senior Notes" below. The Sustainability-Linked Notes are guaranteed by Level 3 Parent, LLC and Level 3 Communications, LLC.

Redemption of Senior Notes

On February 12, 2021, Level 3 Financing, Inc. redeemed all $900 million aggregate principal amount of its outstanding 5.375% Senior Notes due 2024. This transaction resulted in a gain of $16 million.

Long-Term Debt Maturities

Set forth below is the aggregate principal amount of our long-term debt as of September 30, 2021 (excluding unamortized premiums, net, and unamortized debt issuance costs), maturing during the following years.
(Dollars in millions)
2021 (remaining three months)$7 
202224 
202327 
202432 
2025837 
2026 and thereafter9,522 
Total long-term debt$10,449 

Covenants

The term loan and senior notes of Level 3 Financing, Inc. contain 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, engage in transactions with their affiliates including Lumen Technologies and its other subsidiaries, dispose of assets and merge or consolidate with any other person. Also, in connection with a "change of control" of Level 3 Parent, LLC, or Level 3 Financing, Inc., Level 3 Financing will be required to offer to repurchase or repay certain of its long-term debt at a price of 101% of the principal amount of debt repurchased or repaid, plus accrued and unpaid interest.

Certain of Lumen's and our debt instruments contain cross-payment default or cross-acceleration provisions.

Compliance

As of September 30, 2021, we believe we were in compliance with the provisions and financial covenants contained in our material debt agreements in all material respects.
v3.21.2
Property, Plant, and Equipment
 9 Months Ended
Sep. 30, 2021
Property, Plant and Equipment [Abstract]  
Property, Plant and Equipment Property, Plant and Equipment
Net property, plant and equipment is composed of the following:
September 30, 2021December 31, 2020
(Dollars in millions)
Land$305 320 
Fiber conduit and other outside plant (1)
5,495 6,186 
Central office and other network electronics (2)
3,185 3,388 
Support assets (3)
2,480 2,722 
Construction-in-progress (4)
544 720 
Gross property, plant and equipment12,009 13,336 
Accumulated depreciation(2,998)(2,818)
Net property, plant and equipment$9,011 10,518 
_______________________________________________________________________________
(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.

As of September 30, 2021, we classified certain property, plant and equipment as held for sale and discontinued recording depreciation on the disposal group. See Note 2—Planned Divestiture of the Latin American Business for more information.

We recorded depreciation expense of $221 million and $667 million for the three and nine months ended September 30, 2021 and $219 million and $624 million for the three and nine months ended September 30, 2020.
v3.21.2
Fair Value of Financial Instruments
 9 Months Ended
Sep. 30, 2021
Fair Value Disclosures [Abstract]  
Fair Value of Financial Instruments 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 lease and other 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.

The three input levels in the hierarchy of fair value measurements are defined by the FASB are generally as follows:
Input LevelDescription of Input
Level 1Observable inputs such as quoted market prices in active markets.
Level 2Inputs other than quoted prices in active markets that are either directly or indirectly observable.
Level 3Unobservable inputs in which little or no market data exists.
The following table presents the carrying amounts and estimated fair values of our long-term debt, excluding finance leases, as well as the input level used to determine the fair values indicated below:
September 30, 2021December 31, 2020
Input LevelCarrying AmountFair ValueCarrying AmountFair Value
(Dollars in millions)
Liabilities-Long-term debt, excluding finance leases2$10,103 10,208 10,132 10,340 
v3.21.2
Commitments, Contingencies and Other Items
 9 Months Ended
Sep. 30, 2021
Commitments and Contingencies Disclosure [Abstract]  
Commitments, Contingencies and Other Items Commitments, Contingencies and Other Items
We are subject to various claims, legal proceedings and other contingent liabilities, including the matters described below, which individually or in the aggregate could materially affect our financial condition, future results of operations or cash flows. As a matter of course, we are prepared to both litigate these matters to judgment as needed, as well as to evaluate and consider reasonable settlement opportunities.

Irrespective of its merits, litigation may be both lengthy and disruptive to our operations and could cause significant expenditure and diversion of management attention. We review our litigation accrual liabilities on a quarterly basis, but in accordance with applicable accounting guidelines only establish accrual liabilities when losses are deemed probable and reasonably estimable and only revise previously established accrual liabilities when warranted by changes in circumstances, in each case based on then-available information. As such, as of any given date we could have exposure to losses under proceedings as to which no liability has been accrued or as to which the accrued liability is inadequate. Amounts accrued for our litigation and non-income tax contingencies at September 30, 2021 aggregated to approximately $40 million and are included in other current liabilities, other liabilities, and liabilities held for sale in our consolidated balance sheet as of such date. The establishment of an accrual does not mean that actual funds have been set aside to satisfy a given contingency. Thus, the resolution of a particular contingency for the amount accrued could have no effect on our results of operations but nonetheless could have an adverse effect on our cash flows.

Peruvian Tax Litigation

In 2005, the Peruvian tax authorities ("SUNAT") issued tax assessments against one of our Peruvian subsidiaries asserting $26 million of additional income tax withholding and value-added taxes ("VAT"), penalties and interest for calendar years 2001 and 2002 on the basis that the Peruvian subsidiary incorrectly documented its importations. In May 2021, the Company paid the remaining amount on the fractioning regimes entered into by the Company to pay the amount assessed while it was appealed.

We challenged the assessments via administrative and then judicial review processes. In October 2011, the highest administrative review tribunal (the Tribunal) decided the central issue underlying the 2002 assessments in SUNAT's favor. We appealed the Tribunal's decision to the first judicial level, which decided the central issue in favor of Level 3. SUNAT and we filed cross-appeals with the court of appeal. In May 2017, the court of appeal issued a decision reversing the first judicial level. In June 2017, we filed an appeal of the decision to the Supreme Court of Justice, the final judicial level. Oral argument was held before the Supreme Court of Justice in October 2018. A decision on this case is pending.


In October 2013, the Tribunal decided the central issue underlying the 2001 assessments in SUNAT’s favor. We appealed that decision to the first judicial level in Peru, which decided the central issue in favor of SUNAT. In June 2017, we filed an appeal with the court of appeal. In November 2017, the court of appeals issued a decision affirming the first judicial level and we filed an appeal of the decision to the Supreme Court of Justice. Oral argument was held before the Supreme Court of Justice in June 2019. In May 2021, the Company was served with a favorable and final decision from the Supreme Court of Justice. The Company expects an order for SUNAT to comply with the Supreme Court of Justice's decision.
Brazilian Tax Claims

The São Paulo and Rio de Janeiro state tax authorities have issued tax assessments against our Brazilian subsidiaries for the Tax on Distribution of Goods and Services (“ICMS”), mainly with respect to revenue from leasing certain assets and revenue from the provision of Internet access services by treating such activities as the provision of communications services, to which the ICMS tax applies. We filed objections to these assessments in both states, arguing, among other things that neither the lease of assets nor the provision of Internet access qualifies as “communication services” subject to ICMS.

We have appealed to the respective state judicial courts the decisions by the respective state administrative courts that rejected our objections to these assessments. In cases in which state lower courts ruled partially in our favor finding that the lease assets are not subject to ICMS in connection, the State appealed those rulings. In other cases, the assessment was affirmed at the first administrative level and our appeal to the second administrative level is pending. Other assessments are still pending state judicial decisions.

We are vigorously contesting all such assessments in both states and view the assessment of ICMS on revenue from equipment leasing and Internet access to be without merit. These assessments, if upheld, could result in a loss of up to $47 million as of September 30, 2021, in excess of the reserved accruals established for these matters.

Other Proceedings, Disputes and Contingencies

From time to time, we are involved in other proceedings incidental to our business, including patent infringement allegations, regulatory hearings relating primarily to our rates or services, actions relating to employee claims, various tax issues, environmental law issues, grievance hearings before labor regulatory agencies and miscellaneous third-party tort actions.

We are currently defending several patent infringement lawsuits asserted against us by non-practicing entities, many of which are seeking substantial recoveries. These cases have progressed to various stages and one or more may go to trial during the fourth quarter of 2021 or during 2022 if they are not otherwise resolved. Where applicable, we are seeking full or partial indemnification from our vendors and suppliers. As with all litigation, we are vigorously defending these actions and, as a matter of course, are prepared to litigate these matters to judgment, as well as to evaluate and consider all reasonable settlement opportunities.

We are subject to various 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 individually is reasonably expected to exceed $300,000 in fines and penalties.

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

The matters listed above in this Note do not reflect all of our contingencies. For additional information on our contingencies, see Note 16—Commitments, Contingencies and Other Items to the financial statements included in Item 8 of Part II of our Annual Report on Form 10-K for the year ended December 31, 2020. The ultimate outcome of the above-described matters may differ materially from the outcomes anticipated, estimated, projected or implied by us in certain of our statements appearing above in this Note, and proceedings currently viewed as immaterial by us may ultimately materially impact us.
v3.21.2
Accumulated Other Comprehensive Loss
 9 Months Ended
Sep. 30, 2021
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]  
Accumulated Other Comprehensive Loss Accumulated Other Comprehensive Loss
The table below summarizes changes in accumulated other comprehensive loss recorded on our consolidated balance sheets by component for the nine months ended September 30, 2021:
Pension PlansForeign Currency Translation Adjustment and OtherTotal
(Dollars in millions)
Balance at December 31, 2020$(13)(221)(234)
Other comprehensive loss, net of tax— (101)(101)
Net other comprehensive loss— (101)(101)
Balance at September 30, 2021$(13)(322)(335)

The table below summarizes changes in accumulated other comprehensive loss recorded on our consolidated balance sheets by component for the nine months ended September 30, 2020:
Pension PlansForeign Currency Translation Adjustment and OtherTotal
(Dollars in millions)
Balance at December 31, 2019$2 (181)(179)
Other comprehensive loss, net of tax— (179)(179)
Net other comprehensive loss— (179)(179)
Balance at September 30, 2020$2 (360)(358)

During the three and nine month periods ended September 30, 2021 and 2020, there were no reclassifications out of accumulated other comprehensive income (loss) in our statements of operations.
v3.21.2
Other Financial Information
 9 Months Ended
Sep. 30, 2021
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]  
Other Financial Information Other Financial Information
Other Current Assets

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

September 30, 2021December 31, 2020
(Dollars in millions)
Prepaid expenses$108 106 
Contract fulfillment costs48 63 
Contract acquisition costs44 47 
Contract assets29 34 
Other9 47 
Total other current assets$238 297 
v3.21.2
Background (Policies)
 9 Months Ended
Sep. 30, 2021
Accounting Policies [Abstract]  
Basis of Presentation
Basis of Presentation

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

The accompanying consolidated financial statements include our accounts and the accounts of our subsidiaries 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. Due to exchange restrictions and other conditions, effective at the end of the third quarter of 2015 we deconsolidated our Venezuelan subsidiary and began accounting for our investment in our Venezuelan subsidiary using the cost method of accounting. The factors that led to our conclusions at the end of the third quarter of 2015 continued to exist through the third quarter of 2021.
Reclassification We reclassified certain prior period amounts to conform to the current period presentation, including our revenue by product and service categories.
Segments
Segments

Our operations are integrated into and reported as part of Lumen Technologies. Lumen's chief operating decision maker ("CODM") is our CODM, but reviews our financial information on an aggregate basis only in connection with our quarterly and annual reports that we file with the SEC. Consequently, we do not provide our discrete financial information to the CODM on a regular basis. As such, we have determined that we have one reportable segment.
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. Unless otherwise specified, the amounts and information in the notes presented do not include assets and liabilities that have been reclassified as held for sale as of September 30, 2021. See Note 2—Planned Divestiture of the Latin American Business for additional information.
Recently Adopted and Issued Accounting Pronouncements
Recently Adopted Accounting Pronouncements

Debt

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

Investments

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

Income Taxes

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

We adopted ASU 2016-13, "Measurement of Credit Losses on Financial Instruments" ("ASU 2016-13") on January 1, 2020 and recognized a cumulative adjustment to our accumulated deficit as of the date of adoption of $3 million, net of tax effect of $2 million. Please refer to Note 6—Credit Losses on Financial Instruments for more information.


Recently Issued Accounting Pronouncements

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

We lease various dark fiber, office facilities, colocation facilities, switching facilities, other network sites and service equipment to third parties under operating leases. Lease and sublease revenue are included in operating revenue in our consolidated statements of operations.
Credit Losses on Financial Instruments In accordance with ASC 326, "Financial Instruments - Credit Losses," we aggregate financial assets with similar risk characteristics to align our expected credit losses with the credit quality or deterioration over the life of such assets. We monitor certain risk characteristics within our aggregated financial assets and revise their composition accordingly, to the extent internal and external risk factors change each reporting period. Financial assets that do not share risk characteristics with other financial assets are evaluated separately. Our financial assets measured at amortized cost primarily consist of accounts receivable.
v3.21.2
Planned Divestiture of Latin American Business (Tables)
 9 Months Ended
Sep. 30, 2021
Discontinued Operations and Disposal Groups [Abstract]  
Components of pre-tax income and held for sale assets and liabilities The pre-tax net income of the Latin American business is estimated to be as follows in the table below:
Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
LowHighLowHighLowHighLowHigh
(Dollars in millions)
Pre-tax net income $59 72 36 45 $131 160 108 131 
The principal components of the held for sale assets and liabilities as of September 30, 2021 are as follows:

September 30, 2021
(Dollars in millions)
Assets held for sale
Cash and cash equivalents$36 
Accounts receivable, less allowance of $3
83 
Other current assets75 
Property, plant and equipment, net accumulated depreciation of $445
1,545 
Goodwill (1)
718 
Customer relationships and other intangibles, net129 
Other non-current assets71 
Total assets held for sale$2,657 
Liabilities held for sale
Accounts payable$76 
Salaries and benefits22 
Income and other taxes32 
Current portion of deferred revenue28 
Other current liabilities10 
Deferred income taxes, net116 
Other non-current liabilities128 
Total liabilities held for sale$412 
______________________________________________________________________
(1)    The assignment of goodwill was based on the relative fair value of the disposal group compared to the fair value of the total Company prior to being reclassified as held for sale.
v3.21.2
Goodwill, Customer Relationships and Other Intangible Assets (Tables)
 9 Months Ended
Sep. 30, 2021
Goodwill and Intangible Assets Disclosure [Abstract]  
Schedule of goodwill, customer relationships and other intangible assets
Goodwill, customer relationships and other intangible assets consisted of the following:
September 30, 2021December 31, 2020
(Dollars in millions)
Goodwill$6,667 7,405 
Customer relationships, less accumulated amortization of $2,617 and $2,246
$5,487 6,156 
Capitalized software, less accumulated amortization of $322 and $256
387 401 
Trade names, less accumulated amortization of $98 and $83
33 48 
Total other intangible assets, net$5,907 6,605 
Schedule of goodwill
The following table shows the rollforward of goodwill from December 31, 2020 through September 30, 2021:
(Dollars in millions)
As of December 31, 2020 (1)
$7,405 
Reclassified as held for sale (2)
(718)
Effect of foreign currency exchange rate changes(20)
As of September 30, 2021 (1)
$6,667 
_______________________________________________________________________________
(1)Goodwill at September 30, 2021 and December 31, 2020 is net of accumulated impairment loss of $3.6 billion and $3.7 billion, respectively. The change in accumulated impairment losses at September 30, 2021 is a result of amounts reclassified to held for sale related to our planned divestiture.
(2)Represents the amount of goodwill, net of accumulated impairment loss reclassified as held for sale related to our planned divestiture. See Note 2—Planned Divestiture of the Latin American Business.
Schedule of estimated amortization expense for intangible assets
We estimate that total amortization expense for intangible assets for the years ending December 31, 2021 through 2025 will be as provided in the table below. As a result of reclassifying our disposal group as being held for sale on our September 30, 2021 consolidated balance sheet, the amounts presented below do not include the future amortization of the intangible assets for the disposal group. See Note 2—Planned Divestiture of the Latin American Business for more information.
(Dollars in millions)
2021 (remaining three months)$200 
2022736 
2023708 
2024704 
2025689 
v3.21.2
Revenue Recognition (Tables)
 9 Months Ended
Sep. 30, 2021
Revenue from Contract with Customer [Abstract]  
Disaggregation of revenue
The following tables provide disaggregation of revenue from contracts with customers based on service offering for the three and nine months ended September 30, 2021 and 2020. It also shows the amount of revenue that is not subject to ASC 606, "Revenue from Contracts with Customers" ("ASC 606"), but is instead governed by other accounting standards:
Three Months Ended September 30, 2021Three Months Ended September 30, 2020
Total Revenue
Adjustments for Non-ASC 606 Revenue (1)
Total Revenue from Contracts with CustomersTotal Revenue
Adjustments for Non-ASC 606 Revenue (1)
Total Revenue from Contracts with Customers
(Dollars in millions)
Compute and Application Services$287 (126)161 274 (124)150 
IP and Data Services890 — 890 878 — 878 
Fiber Infrastructure Services412 (56)356 379 (55)324 
Voice and Other345 (3)342 387 (2)385 
Affiliate Services56 (56)— 53 (53)— 
Total revenue$1,990 (241)1,749 1,971 (234)1,737 
Nine Months Ended September 30, 2021Nine Months Ended September 30, 2020
Total Revenue
Adjustments for Non-ASC 606 Revenue (1)
Total Revenue from Contracts with CustomersTotal Revenue
Adjustments for Non-ASC 606 Revenue (1)
Total Revenue from Contracts with Customers
(Dollars in millions)
Compute and Application Services$850 (380)470 814 (371)443 
IP and Data Services2,659 — 2,659 2,639 — 2,639 
Fiber Infrastructure Services1,210 (164)1,046 1,116 (157)959 
Voice and Other1,078 (8)1,070 1,213 (6)1,207 
Affiliate Services167 (167)— 153 (153)— 
Total revenue$5,964 (719)5,245 5,935 (687)5,248 
_____________________________________________________________________
(1) Includes lease revenue which is not within the scope of ASC 606.
Contract with customer, asset and liability
The following table provides balances of customer receivables, contract assets and contract liabilities, net of amounts reclassified as held for sale as of September 30, 2021 and December 31, 2020:
September 30, 2021December 31, 2020
(Dollars in millions)
Customer receivables (1) (2)
$618 683 
Contract assets (3)
32 38 
Contract liabilities (4)
259 385 
_____________________________________________________________________
(1)Reflects gross customer receivables of $657 million and $728 million, net of allowance for credit losses of $39 million and $45 million, at September 30, 2021 and December 31, 2020, respectively.
(2)As of September 30, 2021, amount excludes customer receivables reclassified as held for sale of $82 million.
(3)As of September 30, 2021, no amounts have been reclassified as held for sale.
(4)As of September 30, 2021, amount excludes contract liabilities reclassified as held for sale of $62 million.
Capitalized contract cost
The following tables provide changes in our contract acquisition costs and fulfillment costs:
Three Months Ended September 30, 2021Three Months Ended September 30, 2020
Acquisition CostsFulfillment CostsAcquisition CostsFulfillment Costs
(Dollars in millions)
Beginning of period balance$75 124 77 122 
Costs incurred15 22 14 21 
Amortization(14)(21)(15)(22)
Reclassified as held for sale (1)
— (27)— — 
End of period balance$76 98 76 121 

Nine Months Ended September 30, 2021Nine Months Ended September 30, 2020
Acquisition CostsFulfillment CostsAcquisition CostsFulfillment Costs
(Dollars in millions)
Beginning of period balance$78 122 79 121 
Costs incurred44 68 44 65 
Amortization(46)(65)(47)(65)
Reclassified as held for sale (1)
— (27)— — 
End of period balance$76 98 76 121 
(1)Represents the amounts reclassified as held for sale related to our planned divestiture. See Note 2—Planned Divestiture of the Latin American Business.
v3.21.2
Credit Losses on Financial Instruments (Tables)
 9 Months Ended
Sep. 30, 2021
Credit Loss [Abstract]  
Activity in allowance for credit losses
The following table presents the activity of our allowance for credit losses for our accounts receivable portfolio:
(Dollars in millions)
Beginning balance at December 31, 2020
$45 
Provision for expected losses14 
Write-offs charged against the allowance(21)
Recoveries collected4 
Reclassified as held for sale (1)
(3)
Ending balance at September 30, 2021
$39 
(1)Represents the amounts reclassified as held for sale related to our planned divestiture. See Note 2—Planned Divestiture of the Latin American Business
v3.21.2
Long-Term Debt (Tables)
 9 Months Ended
Sep. 30, 2021
Debt Disclosure [Abstract]  
Schedule of long-term debt
The following chart reflects our consolidated long-term debt, including finance leases, unamortized discounts and premiums, net and unamortized debt issuance costs, but excluding intercompany debt:
Interest Rates (1)
Maturities (1)
September 30, 2021December 31, 2020
(Dollars in millions)
Level 3 Financing, Inc.
Senior Secured Debt: (2)
Senior notes
3.400% - 3.875%
2027 - 2029
$1,500 1,500 
Tranche B 2027 Term Loan (3) (5)
LIBOR + 1.75%
2027
3,111 3,111 
Senior Notes and other debt:
Senior notes (4)
3.625% - 5.375%
2025 - 2029
5,515 5,515 
Finance leases and other obligationsVariousVarious323 255 
Unamortized premiums, net36 60 
Unamortized debt issuance costs(59)(54)
Total long-term debt10,426 10,387 
Less current maturities(24)(14)
Long-term debt, excluding current maturities$10,402 10,373 
______________________________________________________________________
(1)As of September 30, 2021.
(2)See Note 6—Long-Term Debt in our Annual Report on Form 10-K for the year ended December 31, 2020 for a description of certain parent or subsidiary guarantees and liens securing this debt.
(3)The Tranche B 2027 Term Loan had an interest rate of 1.835% at September 30, 2021 and 1.897% at December 31, 2020.
(4)This debt is fully and unconditionally guaranteed by certain affiliates of Level 3 Financing, Inc., including Level 3 Parent, LLC and Level 3 Communications, LLC.
(5)See Note 1— Background for our considerations of the impact of Reference Rate Reform on our debt subject to rate reference changes from LIBOR.
Schedule of aggregate future contractual maturities of long-term debt and capital leases (excluding discounts) Set forth below is the aggregate principal amount of our long-term debt as of September 30, 2021 (excluding unamortized premiums, net, and unamortized debt issuance costs), maturing during the following years.
(Dollars in millions)
2021 (remaining three months)$7 
202224 
202327 
202432 
2025837 
2026 and thereafter9,522 
Total long-term debt$10,449 
v3.21.2
Property, Plant, and Equipment (Tables)
 9 Months Ended
Sep. 30, 2021
Property, Plant and Equipment [Abstract]  
Schedule of net property, plant and equipment
Net property, plant and equipment is composed of the following:
September 30, 2021December 31, 2020
(Dollars in millions)
Land$305 320 
Fiber conduit and other outside plant (1)
5,495 6,186 
Central office and other network electronics (2)
3,185 3,388 
Support assets (3)
2,480 2,722 
Construction-in-progress (4)
544 720 
Gross property, plant and equipment12,009 13,336 
Accumulated depreciation(2,998)(2,818)
Net property, plant and equipment$9,011 10,518 
_______________________________________________________________________________
(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.
v3.21.2
Fair Value of Financial Instruments (Tables)
 9 Months Ended
Sep. 30, 2021
Fair Value Disclosures [Abstract]  
Schedule of carrying amounts and estimated fair values of long-term debt, excluding capital lease obligations, and input levels to determine fair values
The following table presents the carrying amounts and estimated fair values of our long-term debt, excluding finance leases, as well as the input level used to determine the fair values indicated below:
September 30, 2021December 31, 2020
Input LevelCarrying AmountFair ValueCarrying AmountFair Value
(Dollars in millions)
Liabilities-Long-term debt, excluding finance leases2$10,103 10,208 10,132 10,340 
v3.21.2
Accumulated Other Comprehensive Loss (Tables)
 9 Months Ended
Sep. 30, 2021
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]  
Schedule of accumulated other comprehensive loss
The table below summarizes changes in accumulated other comprehensive loss recorded on our consolidated balance sheets by component for the nine months ended September 30, 2021:
Pension PlansForeign Currency Translation Adjustment and OtherTotal
(Dollars in millions)
Balance at December 31, 2020$(13)(221)(234)
Other comprehensive loss, net of tax— (101)(101)
Net other comprehensive loss— (101)(101)
Balance at September 30, 2021$(13)(322)(335)

The table below summarizes changes in accumulated other comprehensive loss recorded on our consolidated balance sheets by component for the nine months ended September 30, 2020:
Pension PlansForeign Currency Translation Adjustment and OtherTotal
(Dollars in millions)
Balance at December 31, 2019$2 (181)(179)
Other comprehensive loss, net of tax— (179)(179)
Net other comprehensive loss— (179)(179)
Balance at September 30, 2020$2 (360)(358)
v3.21.2
Other Financial Information (Tables)
 9 Months Ended
Sep. 30, 2021
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]  
Schedule of components other current assets
The following table presents details of other current assets reflected in our consolidated balance sheets:

September 30, 2021December 31, 2020
(Dollars in millions)
Prepaid expenses$108 106 
Contract fulfillment costs48 63 
Contract acquisition costs44 47 
Contract assets29 34 
Other9 47 
Total other current assets$238 297 
v3.21.2
Background - Basis of Presentation (Details) - USD ($)
$ in Millions
Sep. 30, 2021
Dec. 31, 2020
Lessee, Lease, Description [Line Items]    
Operating lease, right-of-use asset, Statement of Financial Position [Extensible Enumeration] Other, net Other, net
Current operating lease liabilities $ 283 $ 241
Operating lease liabilities 942 903
Affiliates    
Lessee, Lease, Description [Line Items]    
Operating lease assets 243 83
Current operating lease liabilities 67 31
Operating lease liabilities $ 187 $ 65
v3.21.2
Background - Segments (Details)
 9 Months Ended
Sep. 30, 2021
segment
Accounting Policies [Abstract]  
Number of reportable segments 1
v3.21.2
Background - Recently Adopted Accounting Pronouncements (Details) - USD ($)
$ in Millions
 3 Months Ended 9 Months Ended 12 Months Ended
Sep. 30, 2021
Sep. 30, 2020
Sep. 30, 2021
Sep. 30, 2020
Dec. 31, 2019
Jun. 30, 2021
Dec. 31, 2020
Jun. 30, 2020
New Accounting Pronouncements or Change in Accounting Principle [Line Items]                
Member's equity $ (13,197) $ (12,738) $ (13,197) $ (12,738)     $ (12,905)  
Income tax expense (benefit) 37 42 150 147        
MEMBER'S EQUITY                
New Accounting Pronouncements or Change in Accounting Principle [Line Items]                
Member's equity $ (13,532) $ (13,096) $ (13,532) $ (13,096) $ (13,724) $ (13,412) $ (13,139) $ (13,301)
MEMBER'S EQUITY | Cumulative Effect, Period of Adoption, Adjustment                
New Accounting Pronouncements or Change in Accounting Principle [Line Items]                
Member's equity         3      
Income tax expense (benefit)         $ (2)      
v3.21.2
Planned Divestiture of Latin American Business - Additional Information (Details) - USD ($)
$ in Millions
 3 Months Ended 9 Months Ended
Jul. 25, 2021
Sep. 30, 2021
Sep. 30, 2020
Sep. 30, 2021
Sep. 30, 2020
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]          
Depreciation and amortization   $ 431 $ 429 $ 1,304 $ 1,250
Disposal Group, Held-for-sale, Not Discontinued Operations          
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]          
Depreciation and amortization   $ 26   $ 26  
Disposal Group, Held-for-sale, Not Discontinued Operations | Latin American Business          
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]          
Cash consideration for disposal of business $ 2,700        
Working capital, other purchase price adjustments and transaction expenses $ 50        
v3.21.2
Planned Divestiture of Latin American Business - Pre-tax Net Income (Details) - Disposal Group, Held-for-sale, Not Discontinued Operations - USD ($)
$ in Millions
 3 Months Ended 9 Months Ended
Sep. 30, 2021
Sep. 30, 2020
Sep. 30, 2021
Sep. 30, 2020
Low        
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]        
Pre-tax net income $ 59 $ 36 $ 131 $ 108
High        
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]        
Pre-tax net income $ 72 $ 45 $ 160 $ 131
v3.21.2
Planned Divestiture of Latin American Business - Components of Held for Sale Assets and Liabilities (Details) - USD ($)
$ in Millions
Sep. 30, 2021
Sep. 30, 2020
Assets held for sale    
Cash and cash equivalents $ 36 $ 0
Disposal Group, Held-for-sale, Not Discontinued Operations | Latin American Business    
Assets held for sale    
Cash and cash equivalents 36  
Accounts receivable, less allowance of $3 83  
Other current assets 75  
Property, plant and equipment, net accumulated depreciation of $445 1,545  
Goodwill 718  
Customer relationships and other intangibles, net 129  
Other non-current assets 71  
Total assets held for sale 2,657  
Liabilities held for sale    
Accounts payable 76  
Salaries and benefits 22  
Income and other taxes 32  
Current portion of deferred revenue 28  
Other current liabilities 10  
Deferred income taxes, net 116  
Other non-current liabilities 128  
Total liabilities held for sale 412  
Allowance for doubtful accounts 3  
Accumulated depreciation $ 445  
v3.21.2
Goodwill, Customer Relationships and Other Intangible Assets - Schedule of Goodwill and Other Intangible Assets (Details) - USD ($)
$ in Millions
Sep. 30, 2021
Dec. 31, 2020
Finite-Lived Intangible Assets [Line Items]    
Goodwill $ 6,667 $ 7,405
Other intangible assets, net 5,907 6,605
Customer relationships    
Finite-Lived Intangible Assets [Line Items]    
Other intangible assets, net 5,487 6,156
Accumulated amortization 2,617 2,246
Capitalized software    
Finite-Lived Intangible Assets [Line Items]    
Other intangible assets, net 387 401
Accumulated amortization 322 256
Trade names    
Finite-Lived Intangible Assets [Line Items]    
Other intangible assets, net 33 48
Accumulated amortization $ 98 $ 83
v3.21.2
Goodwill, Customer Relationships and Other Intangible Assets - Additional Information (Details)
$ in Millions
 3 Months Ended 9 Months Ended
Sep. 30, 2021
USD ($)
Sep. 30, 2020
USD ($)
Sep. 30, 2021
USD ($)
reporting_unit
Sep. 30, 2020
USD ($)
Jul. 31, 2021
Goodwill and Intangible Assets Disclosure [Abstract]          
Number of reporting units | reporting_unit     1    
Goodwill impairment percent         17.00%
Acquired finite-lived intangible asset amortization expense $ 210 $ 210 $ 637 $ 626  
Intangible assets, gross, including goodwill $ 15,600   $ 15,600    
v3.21.2
Goodwill, Customer Relationships and Other Intangible Assets - Goodwill Activity (Details) - USD ($)
$ in Millions
 9 Months Ended
Sep. 30, 2021
Dec. 31, 2020
Goodwill [Roll Forward]    
As of December 31, 2020 $ 7,405  
Reclassified as held for sale (718)  
Effect of foreign currency exchange rate changes (20)  
As of September 30, 2021 6,667  
Goodwill, accumulated impairment loss $ 3,600 $ 3,700
v3.21.2
Goodwill, Customer Relationships and Other Intangible Assets - Amortization Expense (Details)
$ in Millions
Sep. 30, 2021
USD ($)
Estimated amortization expense of finite-lived acquisition-related intangible assets  
2021 (remaining three months) $ 200
2022 736
2023 708
2024 704
2025 $ 689
v3.21.2
Revenue Recognition - Disaggregation of Revenue (Details) - USD ($)
$ in Millions
 3 Months Ended 9 Months Ended
Sep. 30, 2021
Sep. 30, 2020
Sep. 30, 2021
Sep. 30, 2020
Disaggregation of Revenue [Line Items]        
Total revenues $ 1,990 $ 1,971 $ 5,964 $ 5,935
Adjustments for non-ASC 606 revenue (241) (234) (719) (687)
Total revenue from contracts with customers 1,749 1,737 5,245 5,248
Compute and Application Services        
Disaggregation of Revenue [Line Items]        
Total revenues 287 274 850 814
Adjustments for non-ASC 606 revenue (126) (124) (380) (371)
Total revenue from contracts with customers 161 150 470 443
IP and Data Services        
Disaggregation of Revenue [Line Items]        
Total revenues 890 878 2,659 2,639
Adjustments for non-ASC 606 revenue 0 0 0 0
Total revenue from contracts with customers 890 878 2,659 2,639
Fiber Infrastructure Services        
Disaggregation of Revenue [Line Items]        
Total revenues 412 379 1,210 1,116
Adjustments for non-ASC 606 revenue (56) (55) (164) (157)
Total revenue from contracts with customers 356 324 1,046 959
Voice and Other        
Disaggregation of Revenue [Line Items]        
Total revenues 345 387 1,078 1,213
Adjustments for non-ASC 606 revenue (3) (2) (8) (6)
Total revenue from contracts with customers 342 385 1,070 1,207
Affiliate Services        
Disaggregation of Revenue [Line Items]        
Total revenues 56 53 167 153
Adjustments for non-ASC 606 revenue (56) (53) (167) (153)
Total revenue from contracts with customers $ 0 $ 0 $ 0 $ 0
v3.21.2
Revenue Recognition - Operating Lease Income (Details) - USD ($)
$ in Millions
 3 Months Ended 9 Months Ended
Sep. 30, 2021
Sep. 30, 2020
Sep. 30, 2021
Sep. 30, 2020
Revenue from Contract with Customer [Abstract]        
Rental income $ 202 $ 197 $ 601 $ 565
Percent of operating revenue 10.00% 10.00% 10.00% 10.00%
v3.21.2
Revenue Recognition - Customer Receivables and Contract Balances (Details) - USD ($)
$ in Millions
Sep. 30, 2021
Dec. 31, 2020
Capitalized Contract Cost [Line Items]    
Customer receivables $ 618 $ 683
Contract assets 32 38
Contract liabilities 259 385
Accounts receivable, gross 657 728
Allowance for credit losses 39 $ 45
Disposal Group, Held-for-sale, Not Discontinued Operations    
Capitalized Contract Cost [Line Items]    
Customer receivables 82  
Contract assets 0  
Contract liabilities $ 62  
v3.21.2
Revenue Recognition - Additional Information - Customer Receivables and Contract Balances (Details) - USD ($)
$ in Millions
 3 Months Ended 9 Months Ended
Sep. 30, 2021
Sep. 30, 2020
Sep. 30, 2021
Sep. 30, 2020
Customer Receivables and Contract Balances [Line Items]        
Revenue recognized $ 30 $ 29 $ 151 $ 158
Minimum        
Customer Receivables and Contract Balances [Line Items]        
Contract term     1 year  
Maximum        
Customer Receivables and Contract Balances [Line Items]        
Contract term     5 years  
v3.21.2
Revenue Recognition - Additional Information - Remaining Performance Obligation (Details)
$ in Billions
Sep. 30, 2021
USD ($)
Revenue from Contract with Customer [Abstract]  
Remaining performance obligation $ 3.6
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-10-01  
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]  
Remaining performance obligation, percentage 85.00%
Expected timing of satisfaction, period 2 years 3 months
v3.21.2
Revenue Recognition - Contract Cost (Details) - USD ($)
$ in Millions
 3 Months Ended 9 Months Ended
Sep. 30, 2021
Sep. 30, 2020
Sep. 30, 2021
Sep. 30, 2020
Acquisition Costs        
Capitalized Contract Cost [Roll Forward]        
Beginning of period balance $ 75 $ 77 $ 78 $ 79
Costs incurred 15 14 44 44
Amortization (14) (15) (46) (47)
Reclassified as held for sale 0 0 0 0
End of period balance 76 76 76 76
Fulfillment Costs        
Capitalized Contract Cost [Roll Forward]        
Beginning of period balance 124 122 122 121
Costs incurred 22 21 68 65
Amortization (21) (22) (65) (65)
Reclassified as held for sale (27) 0 (27) 0
End of period balance $ 98 $ 121 $ 98 $ 121
v3.21.2
Revenue Recognition - Additional Information - Contract Costs (Details)
 9 Months Ended
Sep. 30, 2021
Business Customers | Weighted Average  
Contract Costs [Line Items]  
Length of customer life 30 months
v3.21.2
Leases (Details)
$ in Millions
 3 Months Ended 9 Months Ended
Sep. 30, 2021
USD ($)
property
Sep. 30, 2021
USD ($)
Leases [Abstract]    
Number of ceased properties | property 13  
Accelerated lease costs | $ $ 15 $ 15
v3.21.2
Credit Losses on Financial Instruments (Details)
$ in Millions
 9 Months Ended
Sep. 30, 2021
USD ($)
Financing Receivable, Allowance for Credit Loss [Roll Forward]  
Beginning balance at December 31, 2020 $ 45
Provision for expected losses 14
Write-offs charged against the allowance (21)
Recoveries collected 4
Reclassified as held for sale (3)
Ending balance at September 30, 2021 $ 39
v3.21.2
Long-Term Debt - Schedule of Long Term Debt (Details) - USD ($)
$ in Millions
 9 Months Ended
Sep. 30, 2021
Dec. 31, 2020
Long-term debt    
Long-term debt, gross $ 10,449  
Unamortized premiums, net 36 $ 60
Unamortized debt issuance costs (59) (54)
Long-term Debt and Lease Obligation, Including Current Maturities, Total 10,426 10,387
Less current maturities (24) (14)
Long-term debt, excluding current maturities 10,402 10,373
Senior notes | Senior Notes Maturing 2027-2029    
Long-term debt    
Long-term debt, gross $ 1,500 1,500
Senior notes | Senior Notes Maturing 2027-2029 | Minimum    
Long-term debt    
Stated interest rate 3.40%  
Senior notes | Senior Notes Maturing 2027-2029 | Maximum    
Long-term debt    
Stated interest rate 3.875%  
Senior notes | Senior Notes Maturing 2025-2029    
Long-term debt    
Long-term debt, gross $ 5,515 5,515
Senior notes | Senior Notes Maturing 2025-2029 | Minimum    
Long-term debt    
Stated interest rate 3.625%  
Senior notes | Senior Notes Maturing 2025-2029 | Maximum    
Long-term debt    
Stated interest rate 5.375%  
Term loan | Tranche B 2027 Term Loan    
Long-term debt    
Long-term debt, gross $ 3,111 $ 3,111
Effective percentage 1.835% 1.897%
Term loan | Tranche B 2027 Term Loan | LIBOR    
Long-term debt    
Basis spread on variable rate 1.75%  
Finance leases and other obligations    
Long-term debt    
Long-term debt, gross $ 323 $ 255
v3.21.2
Long-Term Debt - Additional Information (Details) - USD ($)
 9 Months Ended
Feb. 12, 2021
Sep. 30, 2021
Jan. 13, 2021
Long-term debt      
Redemption price, percentage   101.00%  
Senior notes | 5.375% Senior Notes Due 2024      
Long-term debt      
Stated interest rate 5.375%    
Amount of debt redeemed $ 900,000,000    
Gain from extinguishment of debt $ 16,000,000    
Senior notes | 3.750% Sustainability-Linked Senior Notes Due 2029      
Long-term debt      
Debt instrument, face amount     $ 900,000,000
Stated interest rate     3.75%
v3.21.2
Long-Term Debt - Debt Maturities (Details)
$ in Millions
Sep. 30, 2021
USD ($)
Debt Disclosure [Abstract]  
2021 (remaining three months) $ 7
2022 24
2023 27
2024 32
2025 837
2026 and thereafter 9,522
Total long-term debt $ 10,449
v3.21.2
Property, Plant, and Equipment - Schedule (Details) - USD ($)
$ in Millions
Sep. 30, 2021
Dec. 31, 2020
Property, Plant and Equipment [Line Items]    
Gross property, plant and equipment $ 12,009 $ 13,336
Accumulated depreciation (2,998) (2,818)
Net property, plant and equipment 9,011 10,518
Land    
Property, Plant and Equipment [Line Items]    
Gross property, plant and equipment 305 320
Fiber, conduit and other outside plant    
Property, Plant and Equipment [Line Items]    
Gross property, plant and equipment 5,495 6,186
Central office and other network electronics    
Property, Plant and Equipment [Line Items]    
Gross property, plant and equipment 3,185 3,388
Support assets    
Property, Plant and Equipment [Line Items]    
Gross property, plant and equipment 2,480 2,722
Construction in progress    
Property, Plant and Equipment [Line Items]    
Gross property, plant and equipment $ 544 $ 720
v3.21.2
Property, Plant, and Equipment - Additional Information (Details) - USD ($)
$ in Millions
 3 Months Ended 9 Months Ended
Sep. 30, 2021
Sep. 30, 2020
Sep. 30, 2021
Sep. 30, 2020
Property, Plant and Equipment [Abstract]        
Depreciation $ 221 $ 219 $ 667 $ 624
v3.21.2
Fair Value of Financial Instruments (Details) - Fair Value, Measurements, Recurring - Significant Other Observable Inputs (Level 2) - USD ($)
$ in Millions
Sep. 30, 2021
Dec. 31, 2020
Carrying Amount    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis    
Liabilities-Long-term debt, excluding finance leases $ 10,103 $ 10,132
Fair Value    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis    
Liabilities-Long-term debt, excluding finance leases $ 10,208 $ 10,340
v3.21.2
Commitments, Contingencies and Other Items (Details)
 9 Months Ended
Sep. 30, 2021
USD ($)
patent
subsidiary
Loss Contingencies [Line Items]  
Estimated litigation liability $ 40,000,000
Number of patents allegedly infringed | patent 1
Unfavorable Regulatory Action  
Loss Contingencies [Line Items]  
Estimate of possible loss $ 300,000
Peruvian Tax Litigation, Before Interest | Pending Litigation  
Loss Contingencies [Line Items]  
Number of subsidiaries with tax assessment | subsidiary 1
Asserted claim $ 26,000,000
Brazilian Tax Claims | Maximum  
Loss Contingencies [Line Items]  
Estimate of possible loss $ 47,000,000
v3.21.2
Accumulated Other Comprehensive Loss (Details) - USD ($)
$ in Millions
 9 Months Ended
Sep. 30, 2021
Sep. 30, 2020
AOCI Attributable to Parent, Net of Tax [Roll Forward]    
Balance at beginning of period $ 12,905  
Other comprehensive loss, net of tax (101) $ (179)
Net other comprehensive loss (101) (179)
Balance at end of period 13,197 12,738
Pension Plans    
AOCI Attributable to Parent, Net of Tax [Roll Forward]    
Balance at beginning of period (13) 2
Other comprehensive loss, net of tax 0 0
Net other comprehensive loss 0 0
Balance at end of period (13) 2
Foreign Currency Translation Adjustment and Other    
AOCI Attributable to Parent, Net of Tax [Roll Forward]    
Balance at beginning of period (221) (181)
Other comprehensive loss, net of tax (101) (179)
Net other comprehensive loss (101) (179)
Balance at end of period (322) (360)
Total    
AOCI Attributable to Parent, Net of Tax [Roll Forward]    
Balance at beginning of period (234) (179)
Balance at end of period $ (335) $ (358)
v3.21.2
Other Financial Information (Details) - USD ($)
$ in Millions
Sep. 30, 2021
Dec. 31, 2020
Prepaid Expense and Other Assets, Current [Abstract]    
Prepaid expenses $ 108 $ 106
Contract assets 29 34
Other 9 47
Total other current assets 238 297
Fulfillment Costs    
Prepaid Expense and Other Assets, Current [Abstract]    
Contract costs 48 63
Acquisition Costs    
Prepaid Expense and Other Assets, Current [Abstract]    
Contract costs $ 44 $ 47
v3.21.2
Label Element Value
Accounting Standards Update [Extensible Enumeration] us-gaap_AccountingStandardsUpdateExtensibleList Accounting Standards Update 2016-13 [Member]