LEVEL 3 PARENT, LLC, 10-Q filed on 11/5/2020
Quarterly Report
v3.20.2
Cover Page
 9 Months Ended
Sep. 30, 2020
shares
Cover [Abstract]  
Document Type 10-Q
Document Quarterly Report true
Document Period End Date Sep. 30, 2020
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 2020
Document Fiscal Period Focus Q3
v3.20.2
Consolidated Statements of Operations - USD ($)
$ in Millions
 3 Months Ended 9 Months Ended
Sep. 30, 2020
Sep. 30, 2019
Sep. 30, 2020
Sep. 30, 2019
OPERATING REVENUE        
Operating revenues $ 1,971 $ 1,952 $ 5,935 $ 5,828
OPERATING EXPENSES        
Cost of services and products (exclusive of depreciation and amortization) 857 848 2,623 2,550
Selling, general and administrative 300 289 922 964
Operating expenses - affiliates 101 76 274 209
Depreciation and amortization 429 430 1,250 1,209
Goodwill impairment 0 0 0 3,708
Total operating expenses 1,687 1,643 5,069 8,640
OPERATING INCOME (LOSS) 284 309 866 (2,812)
OTHER (EXPENSE) INCOME        
Interest income - affiliate 13 15 39 47
Interest expense (99) (123) (301) (384)
Other income (expense), net 41 (13) 29 2
Total other expense, net (45) (121) (233) (335)
INCOME (LOSS) BEFORE INCOME TAXES 239 188 633 (3,147)
Income tax expense 42 74 147 214
NET INCOME (LOSS) 197 114 486 (3,361)
Non-Affiliate Revenue        
OPERATING REVENUE        
Operating revenues 1,918 1,911 5,782 5,694
Affiliate Services        
OPERATING REVENUE        
Operating revenues $ 53 $ 41 $ 153 $ 134
v3.20.2
Consolidated Statements of Comprehensive Income (Loss) - USD ($)
$ in Millions
 3 Months Ended 9 Months Ended
Sep. 30, 2020
Sep. 30, 2019
Sep. 30, 2020
Sep. 30, 2019
Statement of Comprehensive Income [Abstract]        
NET INCOME (LOSS) $ 197 $ 114 $ 486 $ (3,361)
OTHER COMPREHENSIVE INCOME (LOSS)        
Foreign currency translation adjustments, net of $(21), $22, $(2) and $24 tax 41 (110) (179) (115)
Other comprehensive income (loss), net of tax 41 (110) (179) (115)
COMPREHENSIVE INCOME (LOSS) $ 238 $ 4 $ 307 $ (3,476)
v3.20.2
Consolidated Statements of Comprehensive Income (Loss) (Parenthetical) - USD ($)
$ in Millions
 3 Months Ended 9 Months Ended
Sep. 30, 2020
Sep. 30, 2019
Sep. 30, 2020
Sep. 30, 2019
Statement of Comprehensive Income [Abstract]        
Foreign currency translation adjustments, tax effect $ (21) $ 22 $ (2) $ 24
v3.20.2
Consolidated Balance Sheets - USD ($)
$ in Millions
Sep. 30, 2020
Dec. 31, 2019
CURRENT ASSETS    
Cash and cash equivalents $ 256 $ 316
Accounts receivable, less allowance of $37 and $13 730 667
Note receivable - affiliate 1,468 1,590
Other 316 269
Total current assets 2,770 2,842
Property, plant and equipment, net of accumulated depreciation of $2,546 and $1,825 10,334 9,936
GOODWILL AND OTHER ASSETS    
Goodwill 7,369 7,415
Other intangible assets, net 6,779 7,334
Other, net 1,490 1,571
Total goodwill and other assets 15,638 16,320
TOTAL ASSETS 28,742 29,098
CURRENT LIABILITIES    
Current maturities of long-term debt 13 11
Accounts payable 612 654
Accounts payable - affiliates 1,149 669
Accrued expenses and other liabilities    
Salaries and benefits 196 240
Income and other taxes 127 152
Current operating lease liabilities 256 249
Other 137 162
Current portion of deferred revenue 305 309
Total current liabilities 2,795 2,446
LONG-TERM DEBT 10,377 10,356
DEFERRED REVENUE AND OTHER LIABILITIES    
Deferred revenue 1,389 1,343
Operating lease liabilities 930 854
Other 513 554
Total deferred revenue and other liabilities 2,832 2,751
COMMITMENTS AND CONTINGENCIES (Note 8)
MEMBER'S EQUITY    
Member's equity 13,096 13,724
Accumulated other comprehensive loss (358) (179)
Total member's equity 12,738 13,545
TOTAL LIABILITIES AND MEMBER'S EQUITY $ 28,742 $ 29,098
v3.20.2
Consolidated Balance Sheets (Parenthetical) - USD ($)
$ in Millions
Sep. 30, 2020
Dec. 31, 2019
Statement of Financial Position [Abstract]    
Allowance for doubtful accounts $ 37 $ 13
Accumulated depreciation $ 2,546 $ 1,825
v3.20.2
Consolidated Statements of Cash Flows - USD ($)
$ in Millions
 9 Months Ended
Sep. 30, 2020
Sep. 30, 2019
OPERATING ACTIVITIES    
Net income (loss) $ 486 $ (3,361)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:    
Depreciation and amortization 1,250 1,209
Goodwill impairment 0 3,708
Deferred income taxes 124 165
Changes in current assets and liabilities:    
Accounts receivable (101) (28)
Accounts payable (139) (72)
Other assets and liabilities, net (195) (126)
Other assets and liabilities, affiliate 364 306
Changes in other noncurrent assets and liabilities, net 116 57
Other, net 39 (14)
Net cash provided by operating activities 1,944 1,844
INVESTING ACTIVITIES    
Capital expenditures (1,124) (982)
Payments of notes receivable - affiliates 122 235
Proceeds from sale of property, plant and equipment and other assets 105 27
Other, net 0 (25)
Net cash used in investing activities (897) (745)
FINANCING ACTIVITIES    
Net proceeds from issuance of long-term debt 2,020 988
Distributions (1,075) (709)
Payments of long-term debt (2,056) (404)
Other (4) 0
Net cash used in financing activities (1,115) (125)
Net (decrease) increase in cash, cash equivalents and restricted cash (68) 974
Cash, cash equivalents and restricted cash at beginning of period 338 272
Cash, cash equivalents and restricted cash at end of period 270 1,246
Supplemental cash flow information:    
Income taxes paid, net (20) (17)
Interest paid (net of capitalized interest of $18 and $9) (323) (416)
Cash, cash equivalents and restricted cash:    
Total $ 270 $ 1,246
v3.20.2
Consolidated Statements of Cash Flows (Parenthetical) - USD ($)
$ in Millions
 9 Months Ended
Sep. 30, 2020
Sep. 30, 2019
Statement of Cash Flows [Abstract]    
Capitalized interest $ 18 $ 9
v3.20.2
Consolidated Statements of Member's Equity - USD ($)
$ in Millions
Total
AOCI Attributable to Parent
Member Units
Member Units
Cumulative Effect, Period of Adoption, Adjustment
MEMBER'S EQUITY        
TOTAL MEMBER'S EQUITY   $ (171)    
Balance at beginning of period at Dec. 31, 2018   (171) $ 18,048 $ (39)
MEMBER'S EQUITY        
Net income (loss) $ (3,361)   (3,361)  
Distributions     (709)  
Other     0  
Other comprehensive income (loss) (115) (115)    
Balance at end of period at Sep. 30, 2019   (286) 13,939  
Balance at beginning of period at Jun. 30, 2019   (176) 13,969  
MEMBER'S EQUITY        
Net income (loss) 114   114  
Distributions     (144)  
Other     0  
Other comprehensive income (loss) (110) (110)    
Balance at end of period at Sep. 30, 2019   (286) 13,939  
MEMBER'S EQUITY        
TOTAL MEMBER'S EQUITY 13,653 (286)    
TOTAL MEMBER'S EQUITY 13,545 (179)    
Balance at beginning of period at Dec. 31, 2019   (179) 13,724 $ (3)
MEMBER'S EQUITY        
Net income (loss) 486   486  
Distributions     (1,118)  
Other     7  
Other comprehensive income (loss) (179) (179)    
Balance at end of period at Sep. 30, 2020   (358) 13,096  
Balance at beginning of period at Jun. 30, 2020   (399) 13,301  
MEMBER'S EQUITY        
Net income (loss) 197   197  
Distributions     (400)  
Other     (2)  
Other comprehensive income (loss) 41 41    
Balance at end of period at Sep. 30, 2020   (358) $ 13,096  
MEMBER'S EQUITY        
TOTAL MEMBER'S EQUITY $ 12,738 $ (358)    
v3.20.2
Consolidated Statements of Member's Equity (Parenthetical)
 12 Months Ended
Jan. 01, 2020
Dec. 31, 2019
Dec. 31, 2018
Statement of Stockholders' Equity [Abstract]      
Accounting Standards Update [Extensible List] us-gaap:AccountingStandardsUpdate201613Member us-gaap:AccountingStandardsUpdate201613Member us-gaap:AccountingStandardsUpdate201602Member
v3.20.2
Background
 9 Months Ended
Sep. 30, 2020
Accounting Policies [Abstract]  
Background Background
General

We are an international facilities-based 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.

Effective November 1, 2017, we were acquired by CenturyLink in a cash and stock transaction, including the assumption of our debt.

Basis of Presentation

Our consolidated balance sheet as of December 31, 2019, 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 SEC; however, in our opinion, the disclosures made are adequate to make the information presented not misleading. We believe that these consolidated financial statements include all normal recurring adjustments necessary to fairly present the results for the interim periods. The consolidated results of operations and cash flows for the first nine months of the year are not necessarily indicative of the consolidated results of operations and cash flows that might be expected for the entire year. These consolidated financial statements and the accompanying notes should be read in conjunction with the audited consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2019.

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 2020.

We reclassified certain prior period amounts to conform to the current period presentation, including the categorization of our revenue and expenses for three and nine months ended September 30, 2020 and 2019.

Operating lease assets are included in Other, net under goodwill and other assets on our consolidated balance sheets.
Segments

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

Summary of Significant Accounting Policies

The significant accounting policy below is in addition 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, 2019.

Change in Accounting Policy

During the first quarter of 2020, we elected to change the presentation for taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, including federal and certain state Universal Service Fund (USF) regulatory fees, to present all such taxes on a net basis in our consolidated statements of operations. Prior to the first quarter of 2020, we assessed whether we were the primary obligor or principal taxpayer for the taxes assessed in each jurisdiction where we do business. The previous policy resulted in presenting such USF fees on a gross basis within operating revenue and cost of services and products, and all other significant taxes on a net basis. We applied this change in accounting policy retrospectively during the first quarter of 2020. As a result, we have decreased both operating revenue and cost of services and products by $113 million and $112 million for the three months ended September 30, 2020 and 2019, respectively, and $301 million and $296 million for the nine months ended September 30, 2020 and 2019 respectively. The change has no impact on operating income (loss) or net income (loss) in our consolidated statements of operations. Refer to our Form 8-K filing dated May 7, 2020 for further information.
We changed our policy to present such taxes on the net basis and believe the new policy is preferable because of the historical and potential future regulatory rate changes outside of our control resulting in significant variability in tax and fee revenue that are not indicative of our operating performance. We believe the net presentation provides the most useful and transparent financial information and improves comparability and consistency of financial results.
Operating Lease Income

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

For the three and nine months ended September 30, 2020, our gross rental income was $197 million and $565 million, respectively, which represents approximately 10% for both periods of our operating revenue. For the three and nine months ended September 30, 2019, our gross rental income was $52 million and $153 million, respectively, which represents approximately 3% for both periods of our operating revenue.

Recently Adopted Accounting Pronouncements

During the first quarter of 2020, the SEC made significant changes to its disclosure requirements, Financial Disclosures About Guarantors and Issuers of Guaranteed Securities and Affiliates Whose Securities Collateralize a Registrant’s Securities, which amended disclosure requirements related to registered debt securities which have been updated and relocated to Rule 13-01 of Regulation S-X. The final rule allows for streamlined disclosure models and permits presentation to be included within Management’s Discussion and Analysis of Financial Condition and Results of Operations. The rules become effective January 4, 2021, with voluntary compliance permitted immediately as elected by the Company.
In June 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-13, "Measurement of Credit Losses on Financial Instruments" ("ASU 2016-13"). The primary impact of ASU 2016-13 for us is a change in the model for the recognition of credit losses related to our financial instruments from an incurred loss model, which recognized credit losses only if it was probable that a loss had been incurred, to an expected loss model, which requires us to estimate the total credit losses expected on the portfolio of financial instruments.

We adopted 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. Please refer to Note 4—Credit Losses on Financial Instruments for more information.

Recently Issued Accounting Pronouncements
In December 2019, the FASB issued ASU 2019-12, "Simplifying the Accounting for Income Taxes (Topic 740)" ("ASU 2019-12"). ASU 2019-12 removes certain exceptions for investments, intra-period allocations and interim calculations, and adds guidance to reduce complexity in accounting for income taxes. ASU 2019-12 will become effective for us in the first quarter of fiscal 2021 and early adoption is permitted. We do not believe the adoption will have a significant impact on our consolidated financial statements.

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"), 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. We are evaluating ASU 2020-04's applicability to relevant transactions referencing the London Inter-bank Offering Rate ("LIBOR") or another reference rate expected to be discontinued and the resulting impact on our consolidated financial statements.
Subsequent Event

As of the filing date of this report, $1.2 billion of cash distributions were made to our parent during 2020, of which $125 million were made in the fourth quarter in 2020.

The notes receivable - affiliate due to mature on November 1, 2020 was refinanced via a revolving credit facility on October 15, 2020 due upon demand, or on October 15, 2025, whichever occurs first. Level 3 Parent, LLC is the sole lender under the revolving credit facility, which was initially priced at 4.250%. The revolving credit facility has covenants, such as a maximum total leverage ratio, and is subject to other limitations. The revolving credit facility is subordinated in accordance to the terms required under the CenturyLink credit agreement.
v3.20.2
Goodwill, Customer Relationships and Other Intangible Assets
 9 Months Ended
Sep. 30, 2020
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, 2020December 31, 2019
(Dollars in millions)
Goodwill$7,369 7,415 
Customer relationships, less accumulated amortization of $2,058 and $1,538
$6,315 6,865 
Capitalized software, less accumulated amortization of $229 and $146
409 395 
Trade names, less accumulated amortization of $76 and $57
55 74 
Total other intangible assets, net$6,779 7,334 

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.

Because Lumen's low stock price was a trigger for impairment testing, we estimated the fair value of our operations using only the market approach in the quarter ended March 31, 2019. Applying this approach, we utilized company comparisons and analyst reports within the telecommunications industry, which have historically supported a range of fair values of annualized revenue and EBITDA multiples between 2.1x and 4.9x and 4.9x and 9.8x, respectively. We selected a revenue and EBITDA multiple within this range. As of March 31, 2019, based on our assessments performed as described above, we concluded that the estimated fair value of equity was less than our carrying value of equity as of the date of our triggering event during the first quarter. As a result, we recorded a non-cash, non-tax-deductible goodwill impairment charge of $3.7 billion in the quarter ended March 31, 2019.

The market multiples approach that we used in the quarter ended March 31, 2019 incorporated significant estimates and assumptions related to the forecasted results for the remainder of the year, including revenues, expenses, and the achievement of certain cost synergies. In developing the market multiple, we also considered observed trends of our industry participants. Our assessment included many qualitative factors that required significant judgment. Alternative interpretations of these factors could have resulted in different conclusions regarding the size of our impairments.

During 2020, we observed a decline in Lumen's stock price as a result of events occurring after the end of 2019, including the COVID-19 pandemic. We evaluated whether such events would indicate the fair value of our reporting unit was below its carrying value. We believe these events have impacted the global economy more directly than us and, when considered with other factors, we have concluded it is not more likely than not that our fair value of our reporting unit was less than its carrying value as of the period ended September 30, 2020. In light of the negative impacts of COVID-19 on the global economy, we will continue to evaluate the general economic trends which could have an impact on our assessment of whether it is more likely than not that the fair value of our reporting unit is less than its carrying amount. Future changes could cause our reporting unit fair value to be less than our carrying value, resulting in potential impairments of our goodwill which could have a material effect on our results of operations and financial condition. The extent of the impact, if any, will depend on future developments, including the length and severity of the pandemic and its long-term impacts on the overall economy.

The following table shows the rollforward of goodwill from December 31, 2019 through September 30, 2020:
(Dollars in millions)
As of December 31, 2019
$7,415 
Effect of foreign currency exchange rate changes and other(46)
As of September 30, 2020$7,369 

Total amortization expense for intangible assets for the three months ended September 30, 2020 and 2019, was $210 million and $206 million, respectively, and for the nine months ended September 30, 2020 and 2019 was $626 million and $604 million, respectively. As of September 30, 2020, the gross carrying amount of goodwill, customer relationships, indefinite-life and other intangible assets was $16.5 billion.

We estimate that total amortization expense for intangible assets for the years ending December 31, 2020 through 2024 will be as follows:
(Dollars in millions)
2020 (remaining three months)$211 
2021841 
2022780 
2023752 
2024740 
v3.20.2
Revenue Recognition
 9 Months Ended
Sep. 30, 2020
Revenue from Contract with Customer [Abstract]  
Revenue Recognition Revenue Recognition
Reconciliation of Total Revenue to Revenue from Contracts with Customers

The following table provides 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,Nine Months Ended September 30,
2020201920202019
(Dollars in millions)
Total revenue$1,971 1,952 5,935 5,828 
Adjustments for non-ASC 606 revenue (1)
(234)(94)(687)(288)
Total revenue from contracts with customers$1,737 1,858 5,248 5,540 
_____________________________________________________________________
(1) Includes lease revenue which is not within the scope of ASC 606.

Customer Receivables and Contract Balances

The following table provides balances of customer receivables, contract assets and contract liabilities as of September 30, 2020 and December 31, 2019:
September 30, 2020December 31, 2019
(Dollars in millions)
Customer receivables (1)
$766 678 
Contract assets32 32 
Contract liabilities383 423 
(1)Reflects gross customer receivables of $803 million and $691 million, net of allowance for doubtful accounts of $37 million and $13 million, at September 30, 2020 and December 31, 2019, respectively.

Contract liabilities are consideration we have received from our customers or billed in advance of providing goods or services promised in the future. We defer recognizing this consideration as revenue until we have satisfied the related performance obligation to the customer. Contract liabilities include recurring services billed one month in advance and installation and maintenance charges that are deferred and recognized over the actual or expected contract term, which ranges from one to five years depending on the service. Contract liabilities are included within deferred revenue in our consolidated balance sheets. During the three months ended September 30, 2020 and 2019, we recognized $29 million and $27 million, respectively, and for the nine months ended September 30, 2020 and 2019, we recognized $158 million and $146 million, respectively, of revenue that was included in contract liabilities as of January 1, 2020 and January 1, 2019, respectively.

Performance Obligations

As of September 30, 2020, our estimated revenue expected to be recognized in the future related to performance obligations associated with existing customer contracts (including affiliates) that are partially or wholly unsatisfied is approximately $3.9 billion. We expect to recognize approximately 84% of this revenue through 2022, with the balance recognized thereafter.

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

The following table provides changes in our contract acquisition costs and fulfillment costs:
Three Months Ended September 30,
20202019
(Dollars in millions)
Acquisition CostsFulfillment CostsAcquisition CostsFulfillment Costs
Beginning of period balance$77 122 73 106 
Costs incurred14 21 13 26 
Amortization(15)(22)(12)(17)
End of period balance$76 121 74 115 

Nine Months Ended September 30,
20202019
(Dollars in millions)
Acquisition CostsFulfillment CostsAcquisition CostsFulfillment Costs
Beginning of period balance$79 121 64 84 
Costs incurred44 65 42 77 
Amortization(47)(65)(32)(46)
End of period balance$76 121 74 115 

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 telecommunications 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 an expected contract term of 12 to 60 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.
Products and Services Revenues
We categorize our products, services and revenue among the following five categories:
•IP and Data Services, which include primarily VPN data networks, Ethernet, IP, video (including our facilities-based video services, CDN services and Vyvx broadcast services) and other ancillary services;
•Transport and Infrastructure, which includes private line (including business data services), wavelength, colocation and data center services, including cloud, hosting and application management solutions, professional services, network security services, dark fiber services and other ancillary services;
•Voice and Collaboration, which includes primarily TDM voice services, VoIP and other ancillary services;
•Other, which includes sublease rental income and information technology services and managed services, which may be purchased in conjunction with our other network services; and
•Affiliate services, which includes telecommunication services that we also provide to our external customers.
From time to time, we may change the categorization of our products and services.

Our operating revenue for our products and services consisted of the following categories:
Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
(Dollars in millions)
IP and Data Services$889 910 2,687 2,748 
Transport and Infrastructure654 636 1,936 1,897 
Voice and Collaboration350 362 1,085 1,043 
Other25 3 74 6 
Affiliate Services53 41 153 134 
Total operating revenue$1,971 1,952 5,935 5,828 
v3.20.2
Credit Losses on Financial Instruments
 9 Months Ended
Sep. 30, 2020
Credit Loss [Abstract]  
Credit Losses on Financial Instruments Credit Losses on Financial Instruments
In accordance with ASC 326, "Financial Instruments - Credit Losses" ("ASC 326"), we aggregate financial assets with similar risk characteristics to align our expected credit losses with the credit quality or deterioration over the life of the asset. 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.

In developing our accounts receivable portfolio, we pooled certain assets with similar credit risk characteristics based on the nature of our customers, their industry, policies used to grant credit terms, and their historical and expected credit loss patterns.

Prior to the adoption of the new credit loss standard, the allowance for doubtful accounts receivable reflected our best estimate of probable losses inherent in our receivable portfolio determined based on historical experience, specific allowances for known troubled accounts, and other currently available evidence.
We implemented the new standard effective January 1, 2020, using 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, or credit loss and recovery policies, we perform a qualitative and quantitative assessment to update our current loss rate, which as noted below has increased due to an increase in historic loss experience and weakening economic forecasts. 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. The historical, current, and expected credit loss rates are combined and applied to period end accounts receivable, which results in our allowance for credit losses.

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 January 1, 2020 (1)
$18 
Provision for expected losses34 
Write-offs charged against the allowance(21)
Recoveries collected8 
Foreign currency exchange rate changes adjustment(2)
Ending balance at September 30, 2020
$37 
______________________________________________________________________ 
(1)The beginning balance includes the cumulative effect of the adoption of new credit loss standard

For the nine months ended September 30, 2020, we increased our allowance for credit losses for our accounts receivable portfolio due to an increase in historical and expected loss experience in certain classes of aged balances, which we believe were predominantly attributable to the COVID-19 induced economic slowdown. We believe that decreased write-offs (net of recoveries) driven by COVID-19 have further contributed to an increase in our allowance for credit losses.
v3.20.2
Long-Term Debt
 9 Months Ended
Sep. 30, 2020
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, and unamortized debt issuance costs, but excluding intercompany debt:
Interest Rates(1)
Maturities(1)
September 30, 2020December 31, 2019
(Dollars in millions)
Level 3 Financing, Inc.
Senior Secured Debt:(2)(3)
Senior notes
3.400% - 3.875%
2027 - 2029
$1,500 1,500 
Tranche B 2027 Term Loan (4)
LIBOR + 1.750%
2027
3,111 3,111 
Senior Notes and other debt:
Senior notes (3)
3.625% - 5.375%
2024 - 2029
5,515 5,515 
Finance leasesVariousVarious256 171 
Unamortized premiums, net63 104 
Unamortized debt issuance costs(55)(34)
Total long-term debt10,390 10,367 
Less current maturities(13)(11)
Long-term debt, excluding current maturities$10,377 10,356 
______________________________________________________________________
(1)As of September 30, 2020.
(2)See Note 6—Long-Term Debt in our Annual Report on Form 10-K for the year ended December 31, 2019 for a description of certain parent or subsidiary guarantees and liens securing this debt.
(3)This debt is, or is expected to be, fully and unconditionally guaranteed by certain affiliates of Level 3 Financing, Inc., including Level 3 Parent, LLC and Level 3 Communications, LLC.
(4)The Tranche B 2027 Term Loan had an interest rate of 1.897% at September 30, 2020 and 3.549% at December 31, 2019.

Long-Term Debt Maturities

Set forth below is the aggregate principal amount of our long-term debt and finance leases as of September 30, 2020 (excluding unamortized premiums, net, and unamortized debt issuance costs), maturing during the following years:
(Dollars in millions)
2020 (remaining three months)$5 
202112 
202213 
202315 
2024916 
2025 and thereafter9,421 
Total long-term debt$10,382 
Redemption of Senior Notes

On September 11, 2020, Level 3 Financing, Inc. redeemed all $140 million aggregate principal amount of its remaining outstanding 5.625% Senior Notes due 2023 and all $700 million aggregate principal amount of its 5.125% Senior Notes due 2023. On July 15, 2020, Level 3 Financing, Inc. redeemed all $840 million aggregate principal amount of its outstanding 5.375% Senior Notes due 2022 and $360 million aggregate principal amount of its outstanding 5.625% Senior Notes due 2023. These transactions resulted in a gain of $27 million.

New Issuances

On August 12, 2020, Level 3 Financing, Inc. issued $840 million aggregate principal amount of its 3.625% Senior Notes due 2029 (the "2029 Notes"). The net proceeds from the offering were used to redeem certain of its outstanding senior note indebtedness. See "—Redemption of Senior Notes" above. The 2029 Notes are (i) unconditionally guaranteed by Level 3 Parent, LLC and (ii) expected to be unconditionally guaranteed by Level 3 Communications, LLC upon receipt of all requisite material governmental authorizations.

On June 15, 2020, Level 3 Financing, Inc. issued $1.2 billion aggregate principal amount of its 4.250% Senior Notes due 2028 (the "2028 Notes"). The net proceeds from the offering were used to redeem certain of its outstanding senior note indebtedness. See "—Redemption of Senior Notes" above. The 2028 Notes are (i) unconditionally guaranteed by Level 3 Parent, LLC and (ii) expected to be unconditionally guaranteed by Level 3 Communications, LLC upon receipt of all requisite material governmental authorizations.

Covenants

The term loan, senior secured notes, 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 its ability to declare or pay dividends, repay certain other indebtedness, create liens, incur additional indebtedness, make investments, engage in transactions with its 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, Inc. 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 CenturyLink's and our debt instruments contain cross-acceleration provisions.

Compliance

As of September 30, 2020, we believe we were in compliance with the financial covenants contained in our debt agreements in all material respects.
v3.20.2
Products and Services Revenues
 9 Months Ended
Sep. 30, 2020
Revenue from Contract with Customer [Abstract]  
Products and Services Revenues Revenue Recognition
Reconciliation of Total Revenue to Revenue from Contracts with Customers

The following table provides 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,Nine Months Ended September 30,
2020201920202019
(Dollars in millions)
Total revenue$1,971 1,952 5,935 5,828 
Adjustments for non-ASC 606 revenue (1)
(234)(94)(687)(288)
Total revenue from contracts with customers$1,737 1,858 5,248 5,540 
_____________________________________________________________________
(1) Includes lease revenue which is not within the scope of ASC 606.

Customer Receivables and Contract Balances

The following table provides balances of customer receivables, contract assets and contract liabilities as of September 30, 2020 and December 31, 2019:
September 30, 2020December 31, 2019
(Dollars in millions)
Customer receivables (1)
$766 678 
Contract assets32 32 
Contract liabilities383 423 
(1)Reflects gross customer receivables of $803 million and $691 million, net of allowance for doubtful accounts of $37 million and $13 million, at September 30, 2020 and December 31, 2019, respectively.

Contract liabilities are consideration we have received from our customers or billed in advance of providing goods or services promised in the future. We defer recognizing this consideration as revenue until we have satisfied the related performance obligation to the customer. Contract liabilities include recurring services billed one month in advance and installation and maintenance charges that are deferred and recognized over the actual or expected contract term, which ranges from one to five years depending on the service. Contract liabilities are included within deferred revenue in our consolidated balance sheets. During the three months ended September 30, 2020 and 2019, we recognized $29 million and $27 million, respectively, and for the nine months ended September 30, 2020 and 2019, we recognized $158 million and $146 million, respectively, of revenue that was included in contract liabilities as of January 1, 2020 and January 1, 2019, respectively.

Performance Obligations

As of September 30, 2020, our estimated revenue expected to be recognized in the future related to performance obligations associated with existing customer contracts (including affiliates) that are partially or wholly unsatisfied is approximately $3.9 billion. We expect to recognize approximately 84% of this revenue through 2022, with the balance recognized thereafter.

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

The following table provides changes in our contract acquisition costs and fulfillment costs:
Three Months Ended September 30,
20202019
(Dollars in millions)
Acquisition CostsFulfillment CostsAcquisition CostsFulfillment Costs
Beginning of period balance$77 122 73 106 
Costs incurred14 21 13 26 
Amortization(15)(22)(12)(17)
End of period balance$76 121 74 115 

Nine Months Ended September 30,
20202019
(Dollars in millions)
Acquisition CostsFulfillment CostsAcquisition CostsFulfillment Costs
Beginning of period balance$79 121 64 84 
Costs incurred44 65 42 77 
Amortization(47)(65)(32)(46)
End of period balance$76 121 74 115 

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 telecommunications 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 an expected contract term of 12 to 60 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.
Products and Services Revenues
We categorize our products, services and revenue among the following five categories:
•IP and Data Services, which include primarily VPN data networks, Ethernet, IP, video (including our facilities-based video services, CDN services and Vyvx broadcast services) and other ancillary services;
•Transport and Infrastructure, which includes private line (including business data services), wavelength, colocation and data center services, including cloud, hosting and application management solutions, professional services, network security services, dark fiber services and other ancillary services;
•Voice and Collaboration, which includes primarily TDM voice services, VoIP and other ancillary services;
•Other, which includes sublease rental income and information technology services and managed services, which may be purchased in conjunction with our other network services; and
•Affiliate services, which includes telecommunication services that we also provide to our external customers.
From time to time, we may change the categorization of our products and services.

Our operating revenue for our products and services consisted of the following categories:
Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
(Dollars in millions)
IP and Data Services$889 910 2,687 2,748 
Transport and Infrastructure654 636 1,936 1,897 
Voice and Collaboration350 362 1,085 1,043 
Other25 3 74 6 
Affiliate Services53 41 153 134 
Total operating revenue$1,971 1,952 5,935 5,828 
v3.20.2
Fair Value of Financial Instruments
 9 Months Ended
Sep. 30, 2020
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, note receivable-affiliate, accounts payable, accounts payable-affiliate and long-term debt, excluding finance lease and other obligations. Due to their short-term nature, the carrying amounts of our cash, cash equivalents and restricted cash, accounts receivable, note receivable-affiliate, accounts payable and accounts payable-affiliate approximate their fair values.

The three input levels in the hierarchy of fair value measurements are defined by the Fair Value Measurement and Disclosure framework 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, 2020December 31, 2019
Input LevelCarrying AmountFair ValueCarrying AmountFair Value
(Dollars in millions)
Liabilities-Long-term debt, excluding finance leases2$10,134 10,225 10,196 10,244 
v3.20.2
Commitments, Contingencies and Other Items
 9 Months Ended
Sep. 30, 2020
Commitments and Contingencies Disclosure [Abstract]  
Commitments, Contingencies and Other Items Commitments, Contingencies and Other ItemsWe 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, 2020 aggregated to approximately $55 million and are included in other current liabilities and other liabilities in our consolidated balance sheet as of such date. The establishment of an accrual does not mean that actual funds have been set aside to satisfy a given contingency. Thus, the resolution of a particular contingency for the amount accrued could have no effect on our results of operations but nonetheless could have an adverse effect on our cash flows.

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. After taking into account the developments described below, as well as the accrued interest and foreign exchange effects, we believe the total amount of our exposure was $3 million as of September 30, 2020.

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. A decision on this case is pending.

Brazilian Tax Claims

In December 2004, March 2009, April 2009 and July 2014, the São Paulo state tax authority issued tax assessments against one of our Brazilian subsidiaries for the Tax on Distribution of Goods and Services (“ICMS”) with respect to revenue from leasing certain assets (in the case of the December 2004, March 2009 and July 2014 assessments) and revenue from the provision of Internet access services (in the case of the April 2009 and July 2014 assessments), by treating such activities as the provision of communications services, to which the ICMS tax applies. In September 2002, July 2009 and May 2012, the Rio de Janeiro state tax authority issued tax assessments to the same Brazilian subsidiary on similar issues.
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 qualify as "communication services" subject to ICMS. The objections to the September 2002, December 2004 and March 2009 assessments were rejected by the respective state administrative courts, and we have appealed those decisions to the respective state judicial courts.

In October 2012 and June 2014, the São Paulo state lower court ruled partially in our favor finding that the lease assets are not subject to ICMS in connection with the December 2004 and March 2009 assessments. The state of São Paulo appealed those rulings. Our objection to the April 2009 assessment is pending final administrative action in São Paulo. The July 2014 assessment was affirmed at the first administrative level and our appeal to the second administrative level is pending.

Regarding the September 2002 assessment, in July 2020, the Rio de Janeiro state court ruling in our favor became final once the appeals process had been exhausted. Accordingly, we released the related reserve. Our objections to the July 2009 and May 2012 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 $16 million to as high as $44 million as of September 30, 2020, in excess of the accruals established for these matters.

Qui Tam Action

We were notified in late 2017 of a qui tam action pending against Level 3 Communications, Inc. and others in the U.S. District Court for the Eastern District of Virginia, captioned United States of America ex rel., Stephen Bishop v. Level 3 Communications, Inc. et al. The original qui tam complaint was filed under seal on November 26, 2013, and an amended complaint was filed under seal on June 16, 2014. The court unsealed the complaints on October 26, 2017.

The amended complaint alleges that we, principally through two former employees, submitted false claims and made false statements to the government in connection with two government contracts. The relator seeks damages in this lawsuit of approximately $50 million, subject to trebling, plus statutory penalties, pre-and-post judgment interest, and attorney’s fees. The case is currently stayed.

We are evaluating our defenses to the claims. At this time, we do not believe it is probable we will incur a material loss. If, contrary to our expectations, the plaintiff prevails in this matter and proves damages at or near $50 million, and is successful in having those damages trebled, the outcome could have a material adverse effect on our results of operations in the period in which a liability is recognized and on our cash flows for the period in which any damages are paid.

Several people, including two former Level 3 employees, were indicted in the U.S. District Court for the Eastern District of Virginia on October 3, 2017, and charged with, among other things, accepting kickbacks from a subcontractor, who was also indicted, for work to be performed under a prime government contract. Of the two former employees, one entered a plea agreement, and the other is deceased. We are fully cooperating in the government’s investigations in this matter.

Letters of Credit

It is customary for us to use various financial instruments in the normal course of business. These instruments include letters of credit which are conditional commitments issued on our behalf in accordance with specified terms and conditions. As of both September 30, 2020 and December 31, 2019, we had outstanding letters of credit or other similar obligations of approximately $17 million and $23 million, respectively, of which $11 million and $18 million, respectively, are collateralized by cash that is reflected on the consolidated balance sheets as restricted cash and securities.
Other Proceedings, Disputes and Contingencies

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

We are currently defending several patent infringement lawsuits asserted against us by non-practicing entities, many of which are seeking substantial recoveries. These cases have progressed to various stages and one or more may go to trial during 2020 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 $100,000 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 17 - 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, 2019. 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.
v3.20.2
Accumulated Other Comprehensive Loss
 9 Months Ended
Sep. 30, 2020
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, 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)
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, 2019:
Pension PlansForeign Currency Translation Adjustment and OtherTotal
(Dollars in millions)
Balance at December 31, 2018$5 (176)(171)
Other comprehensive loss, net of tax— (115)(115)
Net other comprehensive loss— (115)(115)
Balance at September 30, 2019$5 (291)(286)

During the three and nine month periods ended September 30, 2020 and 2019 there were no reclassifications out of accumulated other comprehensive income (loss) in our statements of operations.
v3.20.2
Background (Policies)
 9 Months Ended
Sep. 30, 2020
Accounting Policies [Abstract]  
Basis of Presentation
Basis of Presentation

Our consolidated balance sheet as of December 31, 2019, 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 SEC; however, in our opinion, the disclosures made are adequate to make the information presented not misleading. We believe that these consolidated financial statements include all normal recurring adjustments necessary to fairly present the results for the interim periods. The consolidated results of operations and cash flows for the first nine months of the year are not necessarily indicative of the consolidated results of operations and cash flows that might be expected for the entire year. These consolidated financial statements and the accompanying notes should be read in conjunction with the audited consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2019.
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 2020.
Reclassification We reclassified certain prior period amounts to conform to the current period presentation, including the categorization of our revenue and expenses for three and nine months ended September 30, 2020 and 2019.
Operating Leases Operating lease assets are included in Other, net under goodwill and other assets on our consolidated balance sheets.
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 one reportable segment.
Recently Adopted and Issued Accounting Pronouncements
Recently Adopted Accounting Pronouncements

During the first quarter of 2020, the SEC made significant changes to its disclosure requirements, Financial Disclosures About Guarantors and Issuers of Guaranteed Securities and Affiliates Whose Securities Collateralize a Registrant’s Securities, which amended disclosure requirements related to registered debt securities which have been updated and relocated to Rule 13-01 of Regulation S-X. The final rule allows for streamlined disclosure models and permits presentation to be included within Management’s Discussion and Analysis of Financial Condition and Results of Operations. The rules become effective January 4, 2021, with voluntary compliance permitted immediately as elected by the Company.
In June 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-13, "Measurement of Credit Losses on Financial Instruments" ("ASU 2016-13"). The primary impact of ASU 2016-13 for us is a change in the model for the recognition of credit losses related to our financial instruments from an incurred loss model, which recognized credit losses only if it was probable that a loss had been incurred, to an expected loss model, which requires us to estimate the total credit losses expected on the portfolio of financial instruments.

We adopted 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. Please refer to Note 4—Credit Losses on Financial Instruments for more information.

Recently Issued Accounting Pronouncements
In December 2019, the FASB issued ASU 2019-12, "Simplifying the Accounting for Income Taxes (Topic 740)" ("ASU 2019-12"). ASU 2019-12 removes certain exceptions for investments, intra-period allocations and interim calculations, and adds guidance to reduce complexity in accounting for income taxes. ASU 2019-12 will become effective for us in the first quarter of fiscal 2021 and early adoption is permitted. We do not believe the adoption will have a significant impact on our consolidated financial statements.

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"), 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. We are evaluating ASU 2020-04's applicability to relevant transactions referencing the London Inter-bank Offering Rate ("LIBOR") or another reference rate expected to be discontinued and the resulting impact on our consolidated financial statements.
v3.20.2
Goodwill, Customer Relationships and Other Intangible Assets (Tables)
 9 Months Ended
Sep. 30, 2020
Goodwill and Intangible Assets Disclosure [Abstract]  
Schedule of acquisition-related intangible assets
Goodwill, customer relationships and other intangible assets consisted of the following:
September 30, 2020December 31, 2019
(Dollars in millions)
Goodwill$7,369 7,415 
Customer relationships, less accumulated amortization of $2,058 and $1,538
$6,315 6,865 
Capitalized software, less accumulated amortization of $229 and $146
409 395 
Trade names, less accumulated amortization of $76 and $57
55 74 
Total other intangible assets, net$6,779 7,334 
Schedule of goodwill
The following table shows the rollforward of goodwill from December 31, 2019 through September 30, 2020:
(Dollars in millions)
As of December 31, 2019
$7,415 
Effect of foreign currency exchange rate changes and other(46)
As of September 30, 2020$7,369 
Schedule of estimated amortization expense of finite-lived acquisition-related intangible assets
We estimate that total amortization expense for intangible assets for the years ending December 31, 2020 through 2024 will be as follows:
(Dollars in millions)
2020 (remaining three months)$211 
2021841 
2022780 
2023752 
2024740 
v3.20.2
Revenue Recognition (Tables)
 9 Months Ended
Sep. 30, 2020
Revenue from Contract with Customer [Abstract]  
Revenue from External Customers by Products and Services
The following table provides 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,Nine Months Ended September 30,
2020201920202019
(Dollars in millions)
Total revenue$1,971 1,952 5,935 5,828 
Adjustments for non-ASC 606 revenue (1)
(234)(94)(687)(288)
Total revenue from contracts with customers$1,737 1,858 5,248 5,540 
_____________________________________________________________________
(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 as of September 30, 2020 and December 31, 2019:
September 30, 2020December 31, 2019
(Dollars in millions)
Customer receivables (1)
$766 678 
Contract assets32 32 
Contract liabilities383 423 
(1)Reflects gross customer receivables of $803 million and $691 million, net of allowance for doubtful accounts of $37 million and $13 million, at September 30, 2020 and December 31, 2019, respectively.
Capitalized Contract Cost
The following table provides changes in our contract acquisition costs and fulfillment costs:
Three Months Ended September 30,
20202019
(Dollars in millions)
Acquisition CostsFulfillment CostsAcquisition CostsFulfillment Costs
Beginning of period balance$77 122 73 106 
Costs incurred14 21 13 26 
Amortization(15)(22)(12)(17)
End of period balance$76 121 74 115 

Nine Months Ended September 30,
20202019
(Dollars in millions)
Acquisition CostsFulfillment CostsAcquisition CostsFulfillment Costs
Beginning of period balance$79 121 64 84 
Costs incurred44 65 42 77 
Amortization(47)(65)(32)(46)
End of period balance$76 121 74 115 
v3.20.2
Credit Losses on Financial Instruments (Tables)
 9 Months Ended
Sep. 30, 2020
Credit Loss [Abstract]  
Financing Receivable, Allowance for Credit Loss
The following table presents the activity of our allowance for credit losses for our accounts receivable portfolio:
(Dollars in millions)
Beginning balance at January 1, 2020 (1)
$18 
Provision for expected losses34 
Write-offs charged against the allowance(21)
Recoveries collected8 
Foreign currency exchange rate changes adjustment(2)
Ending balance at September 30, 2020
$37 
______________________________________________________________________ 
(1)The beginning balance includes the cumulative effect of the adoption of new credit loss standard
v3.20.2
Long-Term Debt (Tables)
 9 Months Ended
Sep. 30, 2020
Debt Disclosure [Abstract]  
Schedule of Long-term Debt
The following chart reflects our consolidated long-term debt, including finance leases, unamortized discounts and premiums, and unamortized debt issuance costs, but excluding intercompany debt:
Interest Rates(1)
Maturities(1)
September 30, 2020December 31, 2019
(Dollars in millions)
Level 3 Financing, Inc.
Senior Secured Debt:(2)(3)
Senior notes
3.400% - 3.875%
2027 - 2029
$1,500 1,500 
Tranche B 2027 Term Loan (4)
LIBOR + 1.750%
2027
3,111 3,111 
Senior Notes and other debt:
Senior notes (3)
3.625% - 5.375%
2024 - 2029
5,515 5,515 
Finance leasesVariousVarious256 171 
Unamortized premiums, net63 104 
Unamortized debt issuance costs(55)(34)
Total long-term debt10,390 10,367 
Less current maturities(13)(11)
Long-term debt, excluding current maturities$10,377 10,356 
______________________________________________________________________
(1)As of September 30, 2020.
(2)See Note 6—Long-Term Debt in our Annual Report on Form 10-K for the year ended December 31, 2019 for a description of certain parent or subsidiary guarantees and liens securing this debt.
(3)This debt is, or is expected to be, fully and unconditionally guaranteed by certain affiliates of Level 3 Financing, Inc., including Level 3 Parent, LLC and Level 3 Communications, LLC.
(4)The Tranche B 2027 Term Loan had an interest rate of 1.897% at September 30, 2020 and 3.549% at December 31, 2019.
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 and finance leases as of September 30, 2020 (excluding unamortized premiums, net, and unamortized debt issuance costs), maturing during the following years:
(Dollars in millions)
2020 (remaining three months)$5 
202112 
202213 
202315 
2024916 
2025 and thereafter9,421 
Total long-term debt$10,382 
v3.20.2
Products and Services Revenues (Tables)
 9 Months Ended
Sep. 30, 2020
Revenue from Contract with Customer [Abstract]  
Disaggregation of Revenue
Our operating revenue for our products and services consisted of the following categories:
Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
(Dollars in millions)
IP and Data Services$889 910 2,687 2,748 
Transport and Infrastructure654 636 1,936 1,897 
Voice and Collaboration350 362 1,085 1,043 
Other25 3 74 6 
Affiliate Services53 41 153 134 
Total operating revenue$1,971 1,952 5,935 5,828 
v3.20.2
Fair Value of Financial Instruments (Tables)
 9 Months Ended
Sep. 30, 2020
Fair Value Disclosures [Abstract]  
Schedule of Fair Value of Liabilities Measured on a Recurring Basis
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, 2020December 31, 2019
Input LevelCarrying AmountFair ValueCarrying AmountFair Value
(Dollars in millions)
Liabilities-Long-term debt, excluding finance leases2$10,134 10,225 10,196 10,244 
v3.20.2
Accumulated Other Comprehensive Loss (Tables)
 9 Months Ended
Sep. 30, 2020
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]  
Schedule of Accumulated Other Comprehensive Income (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, 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)
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, 2019:
Pension PlansForeign Currency Translation Adjustment and OtherTotal
(Dollars in millions)
Balance at December 31, 2018$5 (176)(171)
Other comprehensive loss, net of tax— (115)(115)
Net other comprehensive loss— (115)(115)
Balance at September 30, 2019$5 (291)(286)
v3.20.2
Background (Details)
$ in Millions
 3 Months Ended 9 Months Ended 10 Months Ended 12 Months Ended
Jan. 01, 2020
Dec. 31, 2020
USD ($)
Sep. 30, 2020
USD ($)
Sep. 30, 2019
USD ($)
Sep. 30, 2020
USD ($)
segment
Sep. 30, 2019
USD ($)
Nov. 05, 2020
USD ($)
Dec. 31, 2019
USD ($)
Dec. 31, 2018
Oct. 15, 2020
Accounting Policies [Abstract]                    
Number of reportable segments | segment         1          
New Accounting Pronouncement, Early Adoption [Line Items]                    
Cost of services and products reduction     $ (857) $ (848) $ (2,623) $ (2,550)        
Revenue reduction     (1,971) (1,952) (5,935) (5,828)        
Rental income     $ 197 $ 52 $ 565 $ 153        
Percent of operating revenue     10.00% 3.00% 10.00% 3.00%        
Accounting Standards Update [Extensible List] us-gaap:AccountingStandardsUpdate201613Member             us-gaap:AccountingStandardsUpdate201613Member us-gaap:AccountingStandardsUpdate201602Member  
Member's equity     $ (12,738) $ (13,653) $ (12,738) $ (13,653)   $ (13,545)    
Subsequent Event                    
New Accounting Pronouncement, Early Adoption [Line Items]                    
Dividends declared             $ 1,200      
Subsequent Event | Revolving Credit Facility | Line of Credit                    
New Accounting Pronouncement, Early Adoption [Line Items]                    
Stated interest rate                   4.25%
Forecast                    
New Accounting Pronouncement, Early Adoption [Line Items]                    
Dividends declared   $ 125                
Cumulative Effect, Period of Adoption, Adjustment | Accounting Standards Update 2016-13                    
New Accounting Pronouncement, Early Adoption [Line Items]                    
Member's equity               $ 3    
Change in Accounting Principle, Universal Service Fund                    
New Accounting Pronouncement, Early Adoption [Line Items]                    
Cost of services and products reduction     (113) (112) (301) (296)        
Revenue reduction     $ (113) $ (112) $ (301) $ (296)        
v3.20.2
Goodwill, Customer Relationships and Other Intangible Assets - Schedule of Goodwill and Other Intangible Assets (Details) - USD ($)
$ in Millions
Sep. 30, 2020
Dec. 31, 2019
Finite-Lived Intangible Assets [Line Items]    
Goodwill $ 7,369 $ 7,415
Other intangible assets, net 6,779 7,334
Customer relationships    
Finite-Lived Intangible Assets [Line Items]    
Other intangible assets, net 6,315 6,865
Accumulated amortization 2,058 1,538
Capitalized software    
Finite-Lived Intangible Assets [Line Items]    
Other intangible assets, net 409 395
Accumulated amortization 229 146
Trade names    
Finite-Lived Intangible Assets [Line Items]    
Other intangible assets, net 55 74
Accumulated amortization 76 57
Other intangible assets, net    
Finite-Lived Intangible Assets [Line Items]    
Other intangible assets, net $ 6,779 $ 7,334
v3.20.2
Goodwill, Customer Relationships and Other Intangible Assets - Additional Information (Details)
$ in Millions
 3 Months Ended 9 Months Ended
Sep. 30, 2020
USD ($)
Sep. 30, 2019
USD ($)
Mar. 31, 2019
USD ($)
Sep. 30, 2020
USD ($)
segment
Sep. 30, 2019
USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]          
Number of reportable segments | segment       1  
Goodwill impairment $ 0 $ 0 $ 3,700 $ 0 $ 3,708
Acquired finite-lived intangible asset amortization expense 210 $ 206   626 $ 604
Intangible assets, gross, including goodwill $ 16,500     $ 16,500  
Minimum | Revenue Multiple          
Goodwill [Line Items]          
Goodwill impairment, measurement input     2.1    
Minimum | EBITDA Multiple          
Goodwill [Line Items]          
Goodwill impairment, measurement input     4.9    
Maximum | Revenue Multiple          
Goodwill [Line Items]          
Goodwill impairment, measurement input     4.9    
Maximum | EBITDA Multiple          
Goodwill [Line Items]          
Goodwill impairment, measurement input     9.8    
v3.20.2
Goodwill, Customer Relationships and Other Intangible Assets - Goodwill Activity (Details)
$ in Millions
 9 Months Ended
Sep. 30, 2020
USD ($)
Goodwill [Roll Forward]  
As of December 31, 2019 $ 7,415
Effect of foreign currency exchange rate changes and other (46)
As of September 30, 2020 $ 7,369
v3.20.2
Goodwill, Customer Relationships and Other Intangible Assets - Amortization Expense (Details)
$ in Millions
Sep. 30, 2020
USD ($)
Estimated amortization expense of finite-lived acquisition-related intangible assets  
2020 (remaining three months) $ 211
2021 841
2022 780
2023 752
2024 $ 740
v3.20.2
Revenue Recognition - Revenue Not Subject to Topic 606 (Details) - USD ($)
$ in Millions
 3 Months Ended 9 Months Ended
Sep. 30, 2020
Sep. 30, 2019
Sep. 30, 2020
Sep. 30, 2019
Revenue from Contract with Customer [Abstract]        
Total revenue $ 1,971 $ 1,952 $ 5,935 $ 5,828
Adjustments for non-ASC 606 revenue (234) (94) (687) (288)
Total revenue from contracts with customers $ 1,737 $ 1,858 $ 5,248 $ 5,540
v3.20.2
Revenue Recognition - Contract Liabilities (Details) - USD ($)
$ in Millions
Sep. 30, 2020
Dec. 31, 2019
Revenue from Contract with Customer [Abstract]    
Customer receivables $ 766 $ 678
Contract assets 32 32
Contract liabilities 383 423
Accounts receivable, gross 803 691
Allowance for doubtful accounts receivable $ 37 $ 13
v3.20.2
Revenue Recognition - Additional Information (Details) - USD ($)
$ in Millions
 3 Months Ended 9 Months Ended
Sep. 30, 2020
Sep. 30, 2019
Sep. 30, 2020
Sep. 30, 2019
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]        
Revenue recognized $ 29 $ 27 $ 158 $ 146
Minimum        
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]        
Contract term     1 year  
Length of customer life     12 months  
Maximum        
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]        
Contract term     5 years  
Length of customer life     60 months  
v3.20.2
Revenue Recognition - Remaining Performance Obligation (Details)
$ in Billions
Sep. 30, 2020
USD ($)
Revenue from Contract with Customer [Abstract]  
Remaining performance obligation $ 3.9
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-10-01  
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]  
Remaining performance obligation, percentage 84.00%
Expected timing of satisfaction, period 2 years 3 months
v3.20.2
Revenue Recognition - Capitalized Contract Cost (Details) - USD ($)
$ in Millions
 3 Months Ended 9 Months Ended
Sep. 30, 2020
Sep. 30, 2019
Sep. 30, 2020
Sep. 30, 2019
Acquisition Costs        
Capitalized Contract Cost [Roll Forward]        
Beginning of period balance $ 77 $ 73 $ 79 $ 64
Costs incurred 14 13 44 42
Amortization (15) (12) (47) (32)
End of period balance 76 74 76 74
Fulfillment Costs        
Capitalized Contract Cost [Roll Forward]        
Beginning of period balance 122 106 121 84
Costs incurred 21 26 65 77
Amortization (22) (17) (65) (46)
End of period balance $ 121 $ 115 $ 121 $ 115
v3.20.2
Credit Losses on Financial Instruments (Details)
$ in Millions
 9 Months Ended
Sep. 30, 2020
USD ($)
Financing Receivable, Allowance for Credit Loss [Roll Forward]  
Beginning balance at January 1, 2020 $ 18
Provision for expected losses 34
Write-offs charged against the allowance (21)
Recoveries collected 8
Foreign currency exchange rate changes adjustment (2)
Ending balance at September 30, 2020 $ 37
v3.20.2
Long-Term Debt - Schedule of Long Term Debt (Details) - USD ($)
$ in Millions
 9 Months Ended
Sep. 30, 2020
Dec. 31, 2019
Long-term debt    
Long-term debt, gross $ 10,382  
Unamortized premiums, net 63 $ 104
Unamortized debt issuance costs (55) (34)
Total long-term debt 10,390 10,367
Less current maturities (13) (11)
Long-term debt, excluding current maturities 10,377 10,356
Senior notes | Senior Notes with Varied Maturity Date    
Long-term debt    
Long-term debt, gross $ 1,500 1,500
Senior notes | Senior Notes with Varied Maturity Date | Minimum    
Long-term debt    
Stated interest rate 3.40%  
Senior notes | Senior Notes with Varied Maturity Date | Maximum    
Long-term debt    
Stated interest rate 3.875%  
Senior notes | 3.625% - 5.625% Senior Notes    
Long-term debt    
Long-term debt, gross $ 5,515 5,515
Senior notes | 3.625% - 5.625% Senior Notes | Minimum    
Long-term debt    
Stated interest rate 3.625%  
Senior notes | 3.625% - 5.625% Senior Notes | 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 1.897% 3.549%
Term loan | Tranche B 2027 Term Loan | LIBOR    
Long-term debt    
Basis spread on variable rate 1.75%  
Finance leases    
Long-term debt    
Long-term debt, gross $ 256 $ 171
v3.20.2
Long-Term Debt - Debt Maturities (Details)
$ in Millions
Sep. 30, 2020
USD ($)
Debt Disclosure [Abstract]  
2020 (remaining three months) $ 5
2021 12
2022 13
2023 15
2024 916
2025 and thereafter 9,421
Total long-term debt $ 10,382
v3.20.2
Long-Term Debt - Additional Information (Details) - USD ($)
 9 Months Ended
Sep. 11, 2020
Jul. 15, 2020
Sep. 30, 2020
Aug. 12, 2020
Jun. 15, 2020
Long-term debt          
Redemption price, percentage     101.00%    
Senior notes | 3.625% Senior notes due 2029          
Long-term debt          
Stated interest rate       3.625%  
Aggregate principal amount       $ 840,000,000  
Senior notes | 4.250% Senior notes due 2028          
Long-term debt          
Stated interest rate         4.25%
Aggregate principal amount         $ 1,200,000,000
Senior notes | 5.375% Senior notes due 2022 and 5.625% Senior notes due 2023          
Long-term debt          
Gain from extinguishment of debt   $ 27,000,000      
Senior notes | 5.625% Senior notes due 2023          
Long-term debt          
Amount of debt redeemed $ 140,000,000 $ 360,000,000      
Stated interest rate 5.625% 5.625%      
Senior notes | 5.375% Senior notes due 2022          
Long-term debt          
Amount of debt redeemed   $ 840,000,000      
Stated interest rate   5.375%      
Senior notes | 5.125% Senior notes due 2023          
Long-term debt          
Amount of debt redeemed $ 700,000,000        
Stated interest rate 5.125%        
v3.20.2
Products and Services Revenues (Details)
$ in Millions
 3 Months Ended 9 Months Ended
Sep. 30, 2020
USD ($)
Sep. 30, 2019
USD ($)
Sep. 30, 2020
USD ($)
category
Sep. 30, 2019
USD ($)
Revenue from Contract with Customer [Abstract]        
Number of categories of products and services | category     5  
Disaggregation of Revenue [Line Items]        
Operating revenues $ 1,971 $ 1,952 $ 5,935 $ 5,828
IP and Data Services        
Disaggregation of Revenue [Line Items]        
Operating revenues 889 910 2,687 2,748
Transport and Infrastructure        
Disaggregation of Revenue [Line Items]        
Operating revenues 654 636 1,936 1,897
Voice and Collaboration        
Disaggregation of Revenue [Line Items]        
Operating revenues 350 362 1,085 1,043
Other        
Disaggregation of Revenue [Line Items]        
Operating revenues 25 3 74 6
Affiliate Services        
Disaggregation of Revenue [Line Items]        
Operating revenues $ 53 $ 41 $ 153 $ 134
v3.20.2
Fair Value of Financial Instruments (Details) - Fair Value, Measurements, Recurring - Significant Other Observable Inputs (Level 2) - USD ($)
$ in Millions
Sep. 30, 2020
Dec. 31, 2019
Carrying Amount    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis    
Liabilities-Long-term debt, excluding finance leases $ 10,134 $ 10,196
Fair Value    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis    
Liabilities-Long-term debt, excluding finance leases $ 10,225 $ 10,244
v3.20.2
Commitments, Contingencies and Other Items (Details)
 9 Months Ended
Sep. 30, 2020
USD ($)
contract
Employee
subsidiary
Dec. 31, 2019
USD ($)
Dec. 31, 2005
subsidiary
Loss Contingencies [Line Items]      
Estimated litigation liability $ 55,000,000    
Letters of credit outstanding, amount 17,000,000 $ 23,000,000  
Collateralized financings 11,000,000 $ 18,000,000  
Unfavorable Regulatory Action      
Loss Contingencies [Line Items]      
Estimate of possible loss 100,000    
Peruvian Tax Litigation, Before Interest | Pending Litigation      
Loss Contingencies [Line Items]      
Number of subsidiaries with tax assessment | subsidiary     1
Asserted claim 26,000,000    
Estimate of possible loss 3,000,000    
Brazilian Tax Claims | Minimum      
Loss Contingencies [Line Items]      
Estimate of possible loss 16,000,000    
Brazilian Tax Claims | Maximum      
Loss Contingencies [Line Items]      
Estimate of possible loss $ 44,000,000    
Brazilian Tax Claims | Pending Litigation      
Loss Contingencies [Line Items]      
Number of subsidiaries with tax assessment | subsidiary 1    
United States of America ex rel., Stephen Bishop v. Level 3 Communications, Inc. et al.      
Loss Contingencies [Line Items]      
Number of former employees names in lawsuit | Employee 2    
Number of government contracts in question | contract 2    
Damages sought, value $ 50,000,000    
Number of former employees with plea agreements | Employee 1    
v3.20.2
Accumulated Other Comprehensive Loss (Details) - USD ($)
$ in Millions
 9 Months Ended
Sep. 30, 2020
Sep. 30, 2019
AOCI Attributable to Parent, Net of Tax [Roll Forward]    
Balance at beginning of period $ 13,545  
Other comprehensive loss, net of tax (179) $ (115)
Net other comprehensive loss (179) (115)
Balance at end of period 12,738 13,653
Pension Plans    
AOCI Attributable to Parent, Net of Tax [Roll Forward]    
Balance at beginning of period 2 5
Other comprehensive loss, net of tax 0 0
Net other comprehensive loss 0 0
Balance at end of period 2 5
Foreign Currency Translation Adjustment and Other    
AOCI Attributable to Parent, Net of Tax [Roll Forward]    
Balance at beginning of period (181) (176)
Other comprehensive loss, net of tax (179) (115)
Net other comprehensive loss (179) (115)
Balance at end of period (360) (291)
AOCI Attributable to Parent    
AOCI Attributable to Parent, Net of Tax [Roll Forward]    
Balance at beginning of period (179) (171)
Balance at end of period $ (358) $ (286)
v3.20.2
Label Element Value
Restricted Cash, Current us-gaap_RestrictedCashCurrent $ 3,000,000
Restricted Cash, Current us-gaap_RestrictedCashCurrent 2,000,000
Restricted Cash, Noncurrent us-gaap_RestrictedCashNoncurrent 12,000,000
Restricted Cash, Noncurrent us-gaap_RestrictedCashNoncurrent $ 19,000,000