Cover
Cover - shares | 6 Months Ended | |
Jun. 30, 2021 | Aug. 05, 2021 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity File Number | 001-03040 | |
Entity Registrant Name | QWEST CORPORATION | |
Entity Incorporation, State or Country Code | CO | |
Entity Tax Identification Number | 84-0273800 | |
Entity Address, Address Line One | 100 CenturyLink Drive, | |
Entity Address, City or Town | Monroe, | |
Entity Address, State or Province | LA | |
Entity Address, Postal Zip Code | 71203 | |
City Area Code | 318 | |
Local Phone Number | 388-9000 | |
Entity Information [Line Items] | ||
Document Period End Date | Jun. 30, 2021 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding (in shares) | 1 | |
Entity Central Index Key | 0000068622 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
6.5% Notes Due 2056 | ||
Entity Information [Line Items] | ||
Title of 12(b) Security | 6.5% Notes Due 2056 | |
Trading Symbol(s) | CTBB | |
Security Exchange Name | NYSE | |
6.75% Notes Due 2057 | ||
Entity Information [Line Items] | ||
Title of 12(b) Security | 6.75% Notes Due 2057 | |
Trading Symbol(s) | CTDD | |
Security Exchange Name | NYSE |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
OPERATING REVENUE | ||||
Total operating revenue | $ 1,724 | $ 1,799 | $ 3,516 | $ 3,717 |
OPERATING EXPENSES | ||||
Cost of services and products (exclusive of depreciation and amortization) | 440 | 490 | 879 | 963 |
Selling, general and administrative | 106 | 139 | 213 | 282 |
Operating expenses—affiliates | 190 | 164 | 384 | 359 |
Depreciation and amortization | 231 | 327 | 548 | 655 |
Total operating expenses | 967 | 1,120 | 2,024 | 2,259 |
OPERATING INCOME | 757 | 679 | 1,492 | 1,458 |
OTHER (EXPENSE) INCOME | ||||
Interest expense | (47) | (75) | (95) | (150) |
Interest expense—affiliate, net | (31) | (16) | (62) | (32) |
Other income (expense), net | 2 | (5) | (4) | (13) |
Total other expense, net | (76) | (96) | (161) | (195) |
INCOME BEFORE INCOME TAX EXPENSE | 681 | 583 | 1,331 | 1,263 |
Income tax expense | 172 | 153 | 340 | 330 |
NET INCOME | 509 | 430 | 991 | 933 |
Non-affiliate services | ||||
OPERATING REVENUE | ||||
Total operating revenue | 1,147 | 1,207 | 2,317 | 2,442 |
Affiliate Services [Member] | ||||
OPERATING REVENUE | ||||
Total operating revenue | $ 577 | $ 592 | $ 1,199 | $ 1,275 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Jun. 30, 2021 | Dec. 31, 2020 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 7 | $ 14 |
Accounts receivable, less allowance of $44 and $61 | 327 | 364 |
Other | 137 | 122 |
Total current assets | 471 | 500 |
Property, plant and equipment, net of accumulated depreciation of $8,719 and $8,347 | 8,200 | 8,309 |
GOODWILL AND OTHER ASSETS | ||
Goodwill | 9,360 | 9,360 |
Other intangible assets, net | 231 | 343 |
Other, net | 146 | 147 |
Total goodwill and other assets | 9,737 | 9,850 |
TOTAL ASSETS | 18,408 | 18,659 |
CURRENT LIABILITIES | ||
Current maturities of long-term debt | 949 | 948 |
Accounts payable | 232 | 292 |
Advances from affiliates | 203 | 592 |
Note payable - affiliate | 1,158 | 1,130 |
Accrued expenses and other liabilities | ||
Salaries and benefits | 158 | 178 |
Income and other taxes | 110 | 95 |
Other | 193 | 186 |
Current portion of deferred revenue | 182 | 183 |
Total current liabilities | 3,185 | 3,604 |
LONG-TERM DEBT | 2,156 | 2,386 |
DEFERRED CREDITS AND OTHER LIABILITIES | ||
Deferred income taxes, net | 1,233 | 1,249 |
Affiliate obligations, net | 628 | 637 |
Other | 687 | 685 |
Total deferred credits and other liabilities | 2,548 | 2,571 |
COMMITMENTS AND CONTINGENCIES (Note 7) | ||
STOCKHOLDER'S EQUITY | ||
Common stock - one share without par value, owned by Qwest Services Corporation | 10,050 | 10,050 |
Retained earnings | 469 | 48 |
Total stockholder's equity | 10,519 | 10,098 |
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY | $ 18,408 | $ 18,659 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Millions | Jun. 30, 2021 | Dec. 31, 2020 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance | $ 44 | $ 61 |
PP&E, accumulated depreciation | $ 8,719 | $ 8,347 |
Common stock, share issued (in shares) | 1 | 1 |
Common stock, share outstanding (in shares) | 1 | 1 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
OPERATING ACTIVITIES | ||
Net income | $ 991 | $ 933 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 548 | 655 |
Deferred income taxes | (16) | (19) |
Provision for uncollectible accounts | 12 | 31 |
Accrued interest on affiliate note | 28 | 31 |
Net loss on early retirement of debt | 8 | 19 |
Changes in current assets and liabilities: | ||
Accounts receivable | 25 | 73 |
Accounts payable | (23) | (69) |
Accrued income and other taxes | 15 | 38 |
Other current assets and liabilities, net | (52) | (197) |
Changes in other noncurrent assets and liabilities, net | 2 | 17 |
Changes in affiliate obligations, net | (9) | (36) |
Other, net | 21 | 8 |
Net cash provided by operating activities | 1,550 | 1,484 |
INVESTING ACTIVITIES | ||
Capital expenditures | (372) | (606) |
Changes in advances to affiliates | 0 | 1,360 |
Proceeds from sale of property, plant and equipment and other assets | 9 | 1 |
Net cash (used in) provided by investing activities | (363) | 755 |
FINANCING ACTIVITIES | ||
Payments of long-term debt | (235) | (1,311) |
Dividends paid | (570) | (925) |
Changes in advances from affiliates | (389) | 0 |
Net cash used in financing activities | (1,194) | (2,236) |
Net (decrease) increase in cash, cash equivalents and restricted cash | (7) | 3 |
Cash, cash equivalents and restricted cash at beginning of period | 15 | 4 |
Cash, cash equivalents and restricted cash at end of period | 8 | 7 |
Supplemental cash flow information: | ||
Income taxes paid, net | (352) | (336) |
Interest paid (net of capitalized interest of $9 and $17) | (97) | (172) |
Cash, cash equivalents and restricted cash: | ||
Cash and cash equivalents | 7 | 5 |
Restricted cash - noncurrent | 1 | 2 |
Total | $ 8 | $ 7 |
CONSOLIDATED STATEMENTS OF CA_2
CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Statement of Cash Flows [Abstract] | ||
Interest paid, capitalized interest | $ 9 | $ 17 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY - USD ($) $ in Millions | Total | COMMON STOCK | RETAINED EARNINGS | RETAINED EARNINGSCumulative Effect, Period of Adoption, Adjustment |
Balance at beginning of period at Dec. 31, 2019 | $ 10,050 | $ 67 | $ 3 | |
Increase (Decrease) in Stockholder's Equity | ||||
Net income | $ 933 | 933 | ||
Dividends declared and paid to Qwest Services Corporation | (925) | (925) | ||
Other | (5) | |||
Balance at end of period at Jun. 30, 2020 | 10,123 | 10,050 | 73 | |
Balance at beginning of period at Mar. 31, 2020 | 10,050 | 68 | ||
Increase (Decrease) in Stockholder's Equity | ||||
Net income | 430 | 430 | ||
Dividends declared and paid to Qwest Services Corporation | (425) | |||
Other | 0 | |||
Balance at end of period at Jun. 30, 2020 | 10,123 | 10,050 | 73 | |
Balance at beginning of period at Dec. 31, 2020 | 10,098 | 10,050 | 48 | |
Increase (Decrease) in Stockholder's Equity | ||||
Net income | 991 | 991 | ||
Dividends declared and paid to Qwest Services Corporation | (570) | (570) | ||
Other | 0 | |||
Balance at end of period at Jun. 30, 2021 | 10,519 | 10,050 | 469 | |
Balance at beginning of period at Mar. 31, 2021 | 10,050 | 230 | ||
Increase (Decrease) in Stockholder's Equity | ||||
Net income | 509 | 509 | ||
Dividends declared and paid to Qwest Services Corporation | (270) | |||
Other | 0 | |||
Balance at end of period at Jun. 30, 2021 | $ 10,519 | $ 10,050 | $ 469 |
CONSOLIDATED STATEMENTS OF ST_2
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY (parenthetical) $ in Millions | 12 Months Ended |
Dec. 31, 2019USD ($) | |
RETAINED EARNINGS | Cumulative Effect, Period of Adoption, Adjustment | |
Income Tax (Expense) Benefit | $ (1) |
Background
Background | 6 Months Ended |
Jun. 30, 2021 | |
Accounting Policies [Abstract] | |
Background | Background General We are an integrated communications company engaged primarily in providing a broad array of communications services to our mass markets and business customers. Our specific products and services are detailed in Note 3—Revenue Recognition of this report. We generate the majority of our total consolidated operating revenue from services provided in the 14-state region of Arizona, Colorado, Idaho, Iowa, Minnesota, Montana, Nebraska, New Mexico, North Dakota, Oregon, South Dakota, Utah, Washington and Wyoming. We refer to this region as our local service area. Basis of Presentation Our consolidated balance sheet as of December 31, 2020, which was derived from our audited consolidated financial statements, and our unaudited interim consolidated financial statements provided herein have been prepared in accordance with the instructions for Form 10-Q. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") have been condensed or omitted pursuant to rules and regulations of the U.S. Securities and Exchange Commission ("SEC"); however, in our opinion, the disclosures made are adequate to make the information presented not misleading. We believe that these consolidated financial statements include all normal recurring adjustments necessary to fairly present the results for the interim periods. The consolidated results of operations and cash flows for the first six months of the year are not necessarily indicative of the consolidated results of operations and cash flows that might be expected for the entire year. These consolidated financial statements and the accompanying notes should be read in conjunction with the audited consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2020. The accompanying consolidated financial statements include our accounts and the accounts of our subsidiaries. Intercompany amounts and transactions with our consolidated subsidiaries have been eliminated. Transactions with our non-consolidated affiliates (referred to herein as affiliates) have not been eliminated. We reclassified certain prior period amounts to conform to the current period presentation, including our revenue by product and service categories. See Note 3—Revenue Recognition for additional information. These changes had no impact on total operating revenue, total operating expenses or net income for any period. Operating lease assets are included in Other, net under goodwill and other assets on our consolidated balance sheets. Current operating lease liabilities are included in Other under accrued expenses and other liabilities on our consolidated balance sheets. Noncurrent operating lease liabilities are included in Other under deferred credits and other liabilities on our consolidated balance sheets. Segments Our operations are integrated into and reported as part of Lumen Technologies. Lumen's chief operating decision maker ("CODM") is our CODM but reviews our financial information on an aggregate basis only in connection with our quarterly and annual reports that we file with the SEC. Consequently, we do not provide our discrete financial information to the CODM on a regular basis. As such, we have one reportable segment. Summary of Significant Accounting Policies Refer to the significant accounting policies described in Note 1—Background and Summary of Significant Accounting Policies to the consolidated financial statements and accompanying notes in Part II Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2020. Recently Adopted Accounting Pronouncements Debt On January 1, 2021, we adopted ASU 2020-09, " Debt (Topic 470) Amendments to SEC Paragraphs Pursuant to SEC Release No. 33-10762 " ("ASU 2020-09"). This ASU amends and supersedes various SEC paragraphs to reflect SEC Release No. 33-10762, which includes amendments to the financial disclosure requirements applicable to registered debt offerings that include credit enhancements, such as subsidiary guarantees. The adoption of ASU 2020-09 did not have an impact to our consolidated financial statements. Investments On January 1, 2021, we adopted ASU 2020-01, " Investments - Equity Securities (Topic 321), Investments - Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) - Clarifying the Interactions between Topic 321, Topic 323, and Topic 815) " ("ASU 2020-01"). This ASU, among other things, clarifies that a company should consider observable transactions that require a company to either apply or discontinue the equity method of accounting under Topic 323, Investments - Equity Method and Joint Ventures, for the purposes of applying the measurement alternative in accordance with Topic 321 immediately before applying or upon discontinuing the equity method. As of June 30, 2021, we determined there was no application or discontinuation of the equity method during the reporting periods. The adoption of ASU 2020-01 did not have an impact to our consolidated financial statements. Income taxes On January 1, 2021, we adopted ASU 2019-12, " Simplifying the Accounting for Income Taxes (Topic 740) " ("ASU 2019-12"). This ASU removes certain exceptions for investments, intra-period allocations and interim calculations, and adds guidance to reduce complexity in accounting for income taxes. The adoption of ASU 2019-12 did not have a material impact to our consolidated financial statements. Measurement of Credit Losses on Financial Instruments We adopted ASU 2016-13, " Measurement of Credit Losses on Financial Instruments " ("ASU 2016-13") on January 1, 2020 and recognized a cumulative adjustment to our accumulated deficit as of the date of adoption of $3 million, net of tax effect of $1 million. Please refer to Note 4—Credit Losses on Financial Instruments for more information. Recently Issued Accounting Pronouncements In March 2020, the FASB issued ASU 2020-04, " Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting |
Goodwill, Customer Relationship
Goodwill, Customer Relationships and Other Intangible Assets | 6 Months Ended |
Jun. 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: June 30, 2021 December 31, 2020 (Dollars in millions) Goodwill $ 9,360 9,360 Customer relationships, less accumulated amortization of $5,699 and $5,611 $ — 88 Other intangible assets, less accumulated amortization of $1,842 and $1,831 231 255 Total other intangible assets, net $ 231 343 Substantially all of our goodwill was derived from Lumen's acquisition of us where the purchase price exceeded the fair value of the net assets acquired. We assess our goodwill for impairment annually as of October 31, or, under certain circumstances, more frequently, such as when events or changes in circumstances indicate there may be impairment. We are required to write-down the value of goodwill in periods in which the carrying value of equity exceeds the estimated fair value of equity, limited to the amount of goodwill. Goodwill is evaluated for impairment at the reporting unit level, and we have determined that we have one reporting unit. As of June 30, 2021, the gross carrying amount of goodwill, customer relationships and other intangible assets was $17.1 billion. The amortization expense for intangible assets for the three months ended June 30, 2021 and 2020 totaled $22 million and $121 million, respectively. The amortization expense for intangible assets for the six months ended June 30, 2021 and 2020 totaled $132 million and $245 million, respectively. We estimate that total amortization expense for intangible assets for the years ending December 31, 2021 through 2025 will be as follows: (Dollars in millions) 2021 (remaining six months) $ 43 2022 85 2023 60 2024 12 2025 10 |
Revenue Recognition
Revenue Recognition | 6 Months Ended |
Jun. 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 four categories: • Voice and Other , which include primarily local voice services, private line and other legacy services. This category also includes Universal Service Fund ("USF") and Connect America Fund Phase II ("CAF II") support payments and other operating revenue. We receive support payments from state USF programs and from the federal CAF II program. These support payments are government subsidies designed to compensate us for providing certain broadband and telecommunications services in high-cost areas or at discounts to low-income, educational, and healthcare customers. During the six months ended June 30, 2021 we recorded approximately $73 million of revenue from the CAF II program that will end as of December 31, 2021. • Fiber Infrastructure Services , which include high speed, fiber-based and lower speed DSL-based broadband services, and optical network services; • IP and Data Services , which consist primarily of Ethernet services; and • Affiliate Services, which are communications services that we also provide to external customers. In addition, we provide to our affiliates application development and support services, network support and technical services. Reconciliation of Total Revenue to Revenue from Contracts with Customers The following tables provide our total revenue by product and service category as well as the amount of revenue that is not subject to ASC 606, "Revenue from Contracts with Customers" ("ASC 606"), but is instead governed by other accounting standards: Three Months Ended June 30, 2021 Three Months Ended June 30, 2020 Total Revenue Adjustments for Non-ASC 606 Revenue (1) Total Revenue from Contracts with Customers Total Revenue Adjustments for Non-ASC 606 Revenue (1) Total Revenue from Contracts with Customers (Dollars in millions) Voice and other $ 530 (83) 447 569 (87) 482 Fiber Infrastructure 501 (29) 472 509 (33) 476 IP and Data Services 116 — 116 129 — 129 Affiliate Services 577 (6) 571 592 (1) 591 Total revenue $ 1,724 (118) 1,606 1,799 (121) 1,678 ____________________________________________________________________ (1) Includes regulatory revenue and lease revenue not within the scope of ASC 606. Six Months Ended June 30, 2021 Six Months Ended June 30, 2020 Total Revenue Adjustments for Non-ASC 606 Revenue (1) Total Revenue from Contracts with Customers Total Revenue Adjustments for Non-ASC 606 Revenue (1) Total Revenue from Contracts with Customers (Dollars in millions) Voice and other $ 1,073 (168) 905 1,159 (176) 983 Fiber Infrastructure 1,005 (60) 945 1,022 (64) 958 IP and Data Services 239 — 239 261 — 261 Affiliate Services 1,199 (9) 1190 1,275 (2) 1,273 Total revenue $ 3,516 (237) 3,279 3,717 (242) 3,475 ____________________________________________________________________ (1) Includes regulatory revenue and lease revenue not within the scope of ASC 606. Operating Lease Revenue Qwest leases various data transmission capacity, office facilities, switching facilities and other network sites to third parties under operating leases. Lease and sublease revenue are included in operating revenue in our consolidated statements of operations. For both the three months ended June 30, 2021 and 2020, our gross rental income was $78 million, which represents approximately 5% and 4%, respectively, of our operating revenue for the three months ended June 30, 2021 and 2020. For both the six months ended June 30, 2021 and 2020, our gross rental income was $157 million, which represents approximately 4% 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 as of June 30, 2021 and December 31, 2020: June 30, 2021 December 31, 2020 (Dollars in millions) Customer receivables (1) $ 304 346 Contract assets 11 13 Contract liabilities 323 300 ______________________________________________________________________ (1) Reflects gross customer receivables, including gross affiliate receivables, of $340 million and $396 million, net of allowance for doubtful accounts of $36 million and $50 million, at June 30, 2021 and December 31, 2020, respectively. Contract liabilities consist of consideration we have received from our customers or billed in advance of providing goods or services promised in the future. We defer recognizing this consideration as revenue until we have satisfied the related performance obligation to the customer. Contract liabilities include recurring services billed one month in advance and installation and maintenance charges that are deferred and recognized over the actual or expected contract term, which ranges from one Performance Obligations As of June 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 $204 million. We expect to recognize approximately 90% of this revenue through 2023, with the balance recognized thereafter. These amounts exclude (i) the value of unsatisfied performance obligations for contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed (for example, uncommitted usage or non-recurring charges associated with professional or technical services to be completed), and (ii) contracts that are classified as leasing arrangements that are not subject to ASC 606. Contract Costs The following tables provide changes in our contract acquisition costs and fulfillment costs: Three Months Ended June 30, 2021 Three Months Ended June 30, 2020 Acquisition Costs Fulfillment Costs Acquisition Costs Fulfillment Costs (Dollars in millions) Beginning of period balance $ 69 52 84 61 Costs incurred 13 6 13 6 Amortization (14) (9) (16) (8) End of period balance $ 68 49 81 59 Six Months Ended June 30, 2021 Six Months Ended June 30, 2020 Acquisition Costs Fulfillment Costs Acquisition Costs Fulfillment Costs (Dollars in millions) Beginning of period balance $ 73 54 86 64 Costs incurred 24 12 27 12 Amortization (29) (17) (32) (17) End of period balance $ 68 49 81 59 Acquisition costs include commission fees paid to employees as a result of obtaining contracts. Fulfillment costs include third party and internal costs associated with the provision, installation and activation of communications services to customers, including labor and materials consumed for these activities. Deferred acquisition and fulfillment costs are amortized based on the transfer of services on a straight-line basis over the average customer life of 30 months for mass markets customers and average contract life of 29 months for business customers. Amortized fulfillment costs are included in cost of services and products and amortized acquisition costs are included in selling, general and administrative expenses in our consolidated statements of operations. The amount of these deferred costs that are anticipated to be amortized in the next 12 months are included in other current assets on our consolidated balance sheets. The amount of deferred costs expected to be amortized beyond the next 12 months is included in other non-current assets on our consolidated balance sheets. Deferred acquisition and fulfillment costs are assessed for impairment on an annual basis. |
Credit Losses on Financial Inst
Credit Losses on Financial Instruments | 6 Months Ended |
Jun. 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. In conjunction with an internal reorganization and changes to how we manage our customers, we pooled certain assets with similar credit risk characteristics based on the nature of our customers, their industry, policies used to grant credit terms and their historical and expected credit loss patterns. Additionally, we reassessed our historical loss period for the portfolio reorganization. If there is a deterioration of a customer's financial condition or if future default rates in general differ from currently anticipated default rates (including changes caused by COVID-19), we may need to adjust the allowance for credit losses, which would affect earnings in the period that adjustments are made. The assessment of the correlation between historical observed default rates, current conditions and forecasted economic conditions requires judgment. Alternative interpretations of these factors could have resulted in different conclusions regarding the allowance for credit losses. The amount of credit loss is sensitive to changes in circumstances and forecasted economic conditions. Our historical credit loss experience, current conditions and forecast of economic conditions may also not be representative of the customers' actual default experience in the future. The following table presents the activity of our allowance for credit losses by accounts receivable portfolio for the six months ended June 30, 2021: Business Mass Markets Total (Dollars in millions) Beginning balance at January 1, 2021 (1) $ 25 36 61 Provision for expected losses 5 7 12 Write-offs charged against the allowance (11) (27) (38) Recoveries collected 1 8 9 Ending balance at June 30, 2021 $ 20 24 44 (1) Due to an internal reorganization of our reporting categories on January 1, 2021, our accounts receivable portfolios were changed to align with changes to how we manage our customers. Allowance for credit losses previously included in the Consumer and Business portfolio of $32 million and $4 million, respectively, were reclassified to the Mass Markets allowance for credit losses on January 1, 2021, as a result of this change. For the six months ended June 30, 2021, we decreased our allowance for credit losses for our business and mass markets accounts receivable portfolios primarily due to higher write-off activity in the quarter with the easing of prior delays due to COVID-19 related restrictions in 2020. |
Long-Term Debt and Note Payable
Long-Term Debt and Note Payable - Affiliate | 6 Months Ended |
Jun. 30, 2021 | |
Debt Disclosure [Abstract] | |
Long-Term Debt and Note Payable - Affiliate | Long-Term Debt and Note Payable - Affiliate The following chart reflects (i) the consolidated long-term debt of Qwest Corporation and its subsidiaries, including finance lease and other obligations, unamortized premiums, net, unamortized debt issuance costs and (ii) note payable - affiliate: Interest Rates (1) Maturities (1) June 30, 2021 December 31, 2020 (Dollars in millions) Senior notes 6.500% - 7.750% 2021 - 2057 $ 2,935 3,170 Term loan (2) (3) LIBOR + 2.00% 2027 215 215 Finance lease and other obligations Various Various 3 6 Unamortized premiums, net 5 5 Unamortized debt issuance costs (53) (62) Total long-term debt 3,105 3,334 Less current maturities (949) (948) Long-term debt, excluding current maturities $ 2,156 2,386 Note payable - affiliate 4.883% 2022 $ 1,158 1,130 _______________________________________________________________________________ (1) As of June 30, 2021. (2) Qwest Corporation's Term Loan had interest rates of 2.110% as of June 30, 2021 and 2.150% as of December 31, 2020. (3) See Note 1— Background for our considerations of the impact of Reference Rate Reform on our debt subject to rate reference changes from LIBOR. Long-Term Debt Maturities Set forth below is the aggregate principal amount of our long-term debt as of June 30, 2021 (excluding unamortized premiums, net and unamortized debt issuance costs and note payable-affiliate) maturing during the following years: (Dollars in millions) 2021 (remaining six months) $ 951 2022 1 2023 — 2024 — 2025 250 2026 and thereafter 1,951 Total long-term debt $ 3,153 Redemption of Senior Notes On February 16, 2021, we fully redeemed all $235 million aggregate principal amount of our outstanding 7.000% Senior Notes due 2056. The redemption of the Senior Notes resulted in a loss of $8 million for the six months ended June 30, 2021. Note Payable - Affiliate Qwest Corporation is currently indebted to an affiliate of our ultimate parent company, Lumen Technologies, Inc., under a revolving promissory note that provides Qwest Corporation with a funding commitment of up to $965 million in aggregate principal amount (the "Intercompany Note"). The outstanding principal balance owed by Qwest Corporation under the Intercompany Note and the accrued interest thereon is due and payable on demand, but if no demand is made, then on June 30, 2022. Interest is accrued on the outstanding principal balance during the respective interest period using a weighted average per annum interest rate on the consolidated outstanding debt of Lumen Technologies, Inc. and its subsidiaries. As of June 30, 2021 and December 31, 2020, the Intercompany Note is reflected on our consolidated balance sheets as a current liability under "Note payable - affiliate". In accordance with the terms of the Intercompany Note, interest shall be assessed on June 30th and December 31st (an "Interest Period"). Any assessed interest for an Interest Period that remains unpaid on the last day of the subsequent Interest Period is capitalized to the outstanding principal balance on such date. Due to the amount of the unpaid interest capitalized since inception of the Intercompany Note, the outstanding principal balance at June 30, 2021 is approximately $1.2 billion. Additionally, as of June 30, 2021, $28 million of accrued interest is reflected in other current liabilities on our consolidated balance sheet. Compliance As of June 30, 2021, we believe we were in compliance with the financial covenants contained in our material debt agreements in all material respects. Other For additional information on our long-term debt and credit facilities, see Note 6—Long-Term Debt and Note Payable - Affiliate to our consolidated financial statements in Item 8 of Part II of our Annual Report on Form 10-K for the year ended December 31, 2020. |
Fair Value Disclosure
Fair Value Disclosure | 6 Months Ended |
Jun. 30, 2021 | |
Fair Value Disclosures [Abstract] | |
Fair Value Disclosure | Fair Value Disclosure Our financial instruments consist of cash and cash equivalents, restricted cash, accounts receivable, advances from affiliates, accounts payable, note payable-affiliate and long-term debt, excluding finance lease and other obligations. Due to their short-term nature, the carrying amounts of our cash and cash equivalents, restricted cash, accounts receivable, advances from affiliates, accounts payable and note payable-affiliate approximate their fair values. The three input levels in the hierarchy of fair value measurements are defined by the Fair Value Measurement and Disclosure framework generally as follows: Input Level Description of Input Level 1 Observable inputs such as quoted market prices in active markets. Level 2 Inputs other than quoted prices in active markets that are either directly or indirectly observable. Level 3 Unobservable inputs in which little or no market data exists. The following table presents the carrying amounts and estimated fair values of our long-term debt, excluding finance lease and other obligations, as well as the input level used to determine the fair values indicated below: June 30, 2021 December 31, 2020 Input Carrying Fair Carrying Fair (Dollars in millions) Liabilities—Long-term debt (excluding finance lease and other obligations) 2 $ 3,102 3,304 3,328 3,532 |
Commitments, Contingencies and
Commitments, Contingencies and Other Items | 6 Months Ended |
Jun. 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 June 30, 2021 aggregated to approximately $19 million and are included in “Other” current liabilities and “Other Liabilities” in our consolidated balance sheet as of such date. The establishment of an accrual does not mean that actual funds have been set aside to satisfy a given contingency. Thus, the resolution of a particular contingency for the amount accrued could have no effect on our results of operations but nonetheless could have an adverse effect on our cash flows. Principal Proceedings Billing Practices Suits In June 2017, a former employee of a Lumen Technologies subsidiary filed an employment lawsuit against Lumen Technologies (at the time known as CenturyLink, Inc.) claiming that she was wrongfully terminated for alleging that Lumen charged some of its retail customers for products and services they did not authorize. Thereafter, based in part on the allegations made by the former employee, several legal proceedings were filed, including consumer class actions in federal and state courts, a series of securities investor class actions in federal courts, and several shareholder derivative actions in federal and Louisiana state courts. The derivative cases were brought on behalf of CenturyLink, Inc. against certain current and former officers and directors of the Company and seek damages for alleged breaches of fiduciary duties. The consumer class actions, the securities investor class actions, and the federal derivative actions were transferred to the U.S. District Court for the District of Minnesota for coordinated and consolidated pretrial proceedings as In Re: CenturyLink Sales Practices and Securities Litigation. Lumen Technologies has settled the consumer and securities investor class actions. The consumer class settlement was previously approved by the Court and is final. The shareholder class settlement was approved by the Court in July 2021. Approximately 12,000 potential class members elected to opt out of the consumer class settlement, and Lumen Technologies has settled the claims of approximately 11,000 such class members asserted by one law firm subject to certain conditions. The derivative actions remain pending. Lumen has engaged in discussions regarding related claims with a number of state attorneys general, and has entered into agreements settling certain of the consumer practices claims asserted by state attorneys general. While Lumen Technologies does not agree with allegations raised in these matters, it has been willing to consider reasonable settlements where appropriate. Other Proceedings, Disputes and Contingencies From time to time, we are involved in other proceedings incidental to our business, including patent infringement allegations, administrative hearings of state public utility commissions relating primarily to our rates or services, actions relating to employee claims, various tax issues, environmental law issues, grievance hearings before labor regulatory agencies and miscellaneous third-party tort actions. We are currently defending several patent infringement lawsuits asserted against us by non-practicing entities, many of which are seeking substantial recoveries. These cases have progressed to various stages and one or more may go to trial during 2021 if they are not otherwise resolved. Where applicable, we are seeking full or partial indemnification from our vendors and suppliers. As with all litigation, we are vigorously defending these actions and, as a matter of course, are prepared to litigate these matters to judgment, as well as to evaluate and consider all reasonable settlement opportunities. We are subject to various federal, state and local environmental protection and health and safety laws. From time to time, we are subject to judicial and administrative proceedings brought by various governmental authorities under these laws. Several such proceedings are currently pending, but none is reasonably expected to exceed $300,000 in fines and penalties. The outcome of these other proceedings described under this heading is not predictable. However, based on current circumstances, we do not believe that the ultimate resolution of these other proceedings, after considering available defenses and any insurance coverage or indemnification rights, will have a material adverse effect on us. The matters listed above in this Note do not reflect all of our contingencies. For additional information on our contingencies, see Note 16—Commitments, Contingencies and Other Items to the financial statements included in Item 8 of Part II of our Annual Report on Form 10-K for the year ended December 31, 2020. The ultimate outcome of the above-described matters may differ materially from the outcomes anticipated, estimated, projected or implied by us in certain of our statements appearing above in this Note, and proceedings currently viewed as immaterial by us may ultimately materially impact us. |
Dividends
Dividends | 6 Months Ended |
Jun. 30, 2021 | |
Dividends [Abstract] | |
Dividends | Dividends From time to time we may declare and pay dividends to our direct parent company, QSC, sometimes in excess of our earnings to the extent permitted by applicable law. Our debt covenants do not currently limit the amount of dividends we can pay to QSC. During the six months ended June 30, 2021 and 2020, we declared and paid dividends to QSC of $570 million and $925 million, respectively. Dividends paid are reflected on our consolidated statements of cash flows as financing activities. |
Other Financial Information
Other Financial Information | 6 Months Ended |
Jun. 30, 2021 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Other Financial Information | Other Financial Information Other Current Assets The following table presents details of other currents assets in our consolidated balance sheets: June 30, 2021 December 31, 2020 (Dollars in millions) Prepaid expenses $ 56 40 Contract acquisition costs 45 47 Contract fulfillment costs 30 28 Other 6 7 Total other current assets $ 137 122 Other Noncurrent Liabilities The following table presents details of other noncurrent liabilities in our consolidated balance sheets: June 30, 2021 December 31, 2020 (Dollars in millions) Unrecognized tax benefits $ 455 448 Deferred revenue 110 108 Noncurrent operating lease liability 67 76 Other 55 53 Total other noncurrent liabilities $ 687 685 |
Labor Union Contracts
Labor Union Contracts | 6 Months Ended |
Jun. 30, 2021 | |
Risks and Uncertainties [Abstract] | |
Labor Union Contracts | Labor Union Contracts As of June 30, 2021, approximately 44% of our employees were represented by the Communication Workers of America ("CWA") or the International Brotherhood of Electrical Workers ("IBEW"). There are no collective bargaining agreements that are scheduled to expire over the 12 month period ending June 30, 2022. We believe relations with our employees continue to be generally good. |
Background (Policies)
Background (Policies) | 6 Months Ended |
Jun. 30, 2021 | |
Accounting Policies [Abstract] | |
Basis of presentation | Our consolidated balance sheet as of December 31, 2020, which was derived from our audited consolidated financial statements, and our unaudited interim consolidated financial statements provided herein have been prepared in accordance with the instructions for Form 10-Q. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") have been condensed or omitted pursuant to rules and regulations of the U.S. Securities and Exchange Commission ("SEC"); however, in our opinion, the disclosures made are adequate to make the information presented not misleading. We believe that these consolidated financial statements include all normal recurring adjustments necessary to fairly present the results for the interim periods. The consolidated results of operations and cash flows for the first six months of the year are not necessarily indicative of the consolidated results of operations and cash flows that might be expected for the entire year. These consolidated financial statements and the accompanying notes should be read in conjunction with the audited consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2020. The accompanying consolidated financial statements include our accounts and the accounts of our subsidiaries. Intercompany amounts and transactions with our consolidated subsidiaries have been eliminated. Transactions with our non-consolidated affiliates (referred to herein as affiliates) have not been eliminated. |
Reclassification | We reclassified certain prior period amounts to conform to the current period presentation, including our revenue by product and service categories. |
Segments | 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. |
Recently adopted and issued accounting pronouncements | Debt On January 1, 2021, we adopted ASU 2020-09, " Debt (Topic 470) Amendments to SEC Paragraphs Pursuant to SEC Release No. 33-10762 " ("ASU 2020-09"). This ASU amends and supersedes various SEC paragraphs to reflect SEC Release No. 33-10762, which includes amendments to the financial disclosure requirements applicable to registered debt offerings that include credit enhancements, such as subsidiary guarantees. The adoption of ASU 2020-09 did not have an impact to our consolidated financial statements. Investments On January 1, 2021, we adopted ASU 2020-01, " Investments - Equity Securities (Topic 321), Investments - Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) - Clarifying the Interactions between Topic 321, Topic 323, and Topic 815) " ("ASU 2020-01"). This ASU, among other things, clarifies that a company should consider observable transactions that require a company to either apply or discontinue the equity method of accounting under Topic 323, Investments - Equity Method and Joint Ventures, for the purposes of applying the measurement alternative in accordance with Topic 321 immediately before applying or upon discontinuing the equity method. As of June 30, 2021, we determined there was no application or discontinuation of the equity method during the reporting periods. The adoption of ASU 2020-01 did not have an impact to our consolidated financial statements. Income taxes On January 1, 2021, we adopted ASU 2019-12, " Simplifying the Accounting for Income Taxes (Topic 740) " ("ASU 2019-12"). This ASU removes certain exceptions for investments, intra-period allocations and interim calculations, and adds guidance to reduce complexity in accounting for income taxes. The adoption of ASU 2019-12 did not have a material impact to our consolidated financial statements. Measurement of Credit Losses on Financial Instruments We adopted ASU 2016-13, " Measurement of Credit Losses on Financial Instruments " ("ASU 2016-13") on January 1, 2020 and recognized a cumulative adjustment to our accumulated deficit as of the date of adoption of $3 million, net of tax effect of $1 million. Please refer to Note 4—Credit Losses on Financial Instruments for more information. Recently Issued Accounting Pronouncements In March 2020, the FASB issued ASU 2020-04, " Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting |
Goodwill and intangible assets, goodwill | We assess our goodwill for impairment annually as of October 31, or, under certain circumstances, more frequently, such as when events or changes in circumstances indicate there may be impairment. We are required to write-down the value of goodwill in periods in which the carrying value of equity exceeds the estimated fair value of equity, limited to the amount of goodwill. Goodwill is evaluated for impairment at the reporting unit level, and we have determined that we have one reporting unit. |
Operating lease income | Qwest leases various data transmission capacity, office facilities, switching facilities and other network sites to third parties under operating leases. Lease and sublease revenue are included in operating revenue in our consolidated statements of operations. |
Credit losses on financial instruments | In accordance with ASC 326, "Financial Instruments - Credit Losses," we aggregate financial assets with similar risk characteristics to align our expected credit losses with the credit quality or deterioration over the life of such assets. We monitor certain risk characteristics within our aggregated financial assets and revise their composition accordingly, to the extent internal and external risk factors change each reporting period. Financial assets that do not share risk characteristics with other financial assets are evaluated separately. Our financial assets measured at amortized cost primarily consist of accounts receivable. |
Goodwill, Customer Relationsh_2
Goodwill, Customer Relationships and Other Intangible Assets (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets and Goodwill | Goodwill, customer relationships and other intangible assets consisted of the following: June 30, 2021 December 31, 2020 (Dollars in millions) Goodwill $ 9,360 9,360 Customer relationships, less accumulated amortization of $5,699 and $5,611 $ — 88 Other intangible assets, less accumulated amortization of $1,842 and $1,831 231 255 Total other intangible assets, net $ 231 343 |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | We estimate that total amortization expense for intangible assets for the years ending December 31, 2021 through 2025 will be as follows: (Dollars in millions) 2021 (remaining six months) $ 43 2022 85 2023 60 2024 12 2025 10 |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Revenue | The following tables provide our total revenue by product and service category as well as the amount of revenue that is not subject to ASC 606, "Revenue from Contracts with Customers" ("ASC 606"), but is instead governed by other accounting standards: Three Months Ended June 30, 2021 Three Months Ended June 30, 2020 Total Revenue Adjustments for Non-ASC 606 Revenue (1) Total Revenue from Contracts with Customers Total Revenue Adjustments for Non-ASC 606 Revenue (1) Total Revenue from Contracts with Customers (Dollars in millions) Voice and other $ 530 (83) 447 569 (87) 482 Fiber Infrastructure 501 (29) 472 509 (33) 476 IP and Data Services 116 — 116 129 — 129 Affiliate Services 577 (6) 571 592 (1) 591 Total revenue $ 1,724 (118) 1,606 1,799 (121) 1,678 ____________________________________________________________________ (1) Includes regulatory revenue and lease revenue not within the scope of ASC 606. Six Months Ended June 30, 2021 Six Months Ended June 30, 2020 Total Revenue Adjustments for Non-ASC 606 Revenue (1) Total Revenue from Contracts with Customers Total Revenue Adjustments for Non-ASC 606 Revenue (1) Total Revenue from Contracts with Customers (Dollars in millions) Voice and other $ 1,073 (168) 905 1,159 (176) 983 Fiber Infrastructure 1,005 (60) 945 1,022 (64) 958 IP and Data Services 239 — 239 261 — 261 Affiliate Services 1,199 (9) 1190 1,275 (2) 1,273 Total revenue $ 3,516 (237) 3,279 3,717 (242) 3,475 ____________________________________________________________________ (1) Includes regulatory revenue and lease revenue not within the scope of ASC 606. |
Contract with customer, asset and liability | The following table provides balances of customer receivables, contract assets and contract liabilities as of June 30, 2021 and December 31, 2020: June 30, 2021 December 31, 2020 (Dollars in millions) Customer receivables (1) $ 304 346 Contract assets 11 13 Contract liabilities 323 300 ______________________________________________________________________ (1) Reflects gross customer receivables, including gross affiliate receivables, of $340 million and $396 million, net of allowance for doubtful accounts of $36 million and $50 million, at June 30, 2021 and December 31, 2020, respectively. |
Capitalized contract cost | The following tables provide changes in our contract acquisition costs and fulfillment costs: Three Months Ended June 30, 2021 Three Months Ended June 30, 2020 Acquisition Costs Fulfillment Costs Acquisition Costs Fulfillment Costs (Dollars in millions) Beginning of period balance $ 69 52 84 61 Costs incurred 13 6 13 6 Amortization (14) (9) (16) (8) End of period balance $ 68 49 81 59 Six Months Ended June 30, 2021 Six Months Ended June 30, 2020 Acquisition Costs Fulfillment Costs Acquisition Costs Fulfillment Costs (Dollars in millions) Beginning of period balance $ 73 54 86 64 Costs incurred 24 12 27 12 Amortization (29) (17) (32) (17) End of period balance $ 68 49 81 59 |
Credit Losses on Financial In_2
Credit Losses on Financial Instruments (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Credit Loss [Abstract] | |
Financing Receivable, Allowance for Credit Loss | The following table presents the activity of our allowance for credit losses by accounts receivable portfolio for the six months ended June 30, 2021: Business Mass Markets Total (Dollars in millions) Beginning balance at January 1, 2021 (1) $ 25 36 61 Provision for expected losses 5 7 12 Write-offs charged against the allowance (11) (27) (38) Recoveries collected 1 8 9 Ending balance at June 30, 2021 $ 20 24 44 |
Long-Term Debt and Note Payab_2
Long-Term Debt and Note Payable - Affiliate (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Debt Disclosure [Abstract] | |
Schedule of long-term debt | The following chart reflects (i) the consolidated long-term debt of Qwest Corporation and its subsidiaries, including finance lease and other obligations, unamortized premiums, net, unamortized debt issuance costs and (ii) note payable - affiliate: Interest Rates (1) Maturities (1) June 30, 2021 December 31, 2020 (Dollars in millions) Senior notes 6.500% - 7.750% 2021 - 2057 $ 2,935 3,170 Term loan (2) (3) LIBOR + 2.00% 2027 215 215 Finance lease and other obligations Various Various 3 6 Unamortized premiums, net 5 5 Unamortized debt issuance costs (53) (62) Total long-term debt 3,105 3,334 Less current maturities (949) (948) Long-term debt, excluding current maturities $ 2,156 2,386 Note payable - affiliate 4.883% 2022 $ 1,158 1,130 _______________________________________________________________________________ (1) As of June 30, 2021. (2) Qwest Corporation's Term Loan had interest rates of 2.110% as of June 30, 2021 and 2.150% as of December 31, 2020. (3) See Note 1— Background for our considerations of the impact of Reference Rate Reform on our debt subject to rate reference changes from LIBOR. |
Schedule of maturities of long-term debt | Set forth below is the aggregate principal amount of our long-term debt as of June 30, 2021 (excluding unamortized premiums, net and unamortized debt issuance costs and note payable-affiliate) maturing during the following years: (Dollars in millions) 2021 (remaining six months) $ 951 2022 1 2023 — 2024 — 2025 250 2026 and thereafter 1,951 Total long-term debt $ 3,153 |
Fair Value Disclosure (Tables)
Fair Value Disclosure (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Fair Value Disclosures [Abstract] | |
Schedule of carrying amounts and estimated fair values of long-term debt, excluding capital lease obligations, and input level to determine fair values | The following table presents the carrying amounts and estimated fair values of our long-term debt, excluding finance lease and other obligations, as well as the input level used to determine the fair values indicated below: June 30, 2021 December 31, 2020 Input Carrying Fair Carrying Fair (Dollars in millions) Liabilities—Long-term debt (excluding finance lease and other obligations) 2 $ 3,102 3,304 3,328 3,532 |
Other Financial Information (Ta
Other Financial Information (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Schedule of components other current assets | The following table presents details of other currents assets in our consolidated balance sheets: June 30, 2021 December 31, 2020 (Dollars in millions) Prepaid expenses $ 56 40 Contract acquisition costs 45 47 Contract fulfillment costs 30 28 Other 6 7 Total other current assets $ 137 122 |
Other Noncurrent Liabilities | The following table presents details of other noncurrent liabilities in our consolidated balance sheets: June 30, 2021 December 31, 2020 (Dollars in millions) Unrecognized tax benefits $ 455 448 Deferred revenue 110 108 Noncurrent operating lease liability 67 76 Other 55 53 Total other noncurrent liabilities $ 687 685 |
Accounting Policies - General (
Accounting Policies - General (Details) | Jun. 30, 2021state |
Accounting Policies [Abstract] | |
Number of states in which entity operates | 14 |
Accounting Policies- Segments (
Accounting Policies- Segments (Details) | 6 Months Ended |
Jun. 30, 2021segment | |
Accounting Policies [Abstract] | |
Number of reportable segments | 1 |
Accounting Policies - Recently
Accounting Policies - Recently Adopted Accounting Pronouncements (Details) - USD ($) $ in Millions | Jun. 30, 2021 | Mar. 31, 2021 | Dec. 31, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 |
Accounting Policies [Abstract] | ||||||
Cumulative effect of new accounting principle in period of adoption, net of tax | $ 10,519 | $ 10,098 | $ 10,123 | |||
RETAINED EARNINGS | ||||||
Accounting Policies [Abstract] | ||||||
Cumulative effect of new accounting principle in period of adoption, net of tax | $ 469 | $ 230 | $ 48 | $ 73 | $ 68 | $ 67 |
Cumulative Effect Of New Accounting Principle In Period Of Adoption, Tax | (1) | |||||
Cumulative Effect, Period of Adoption, Adjustment | RETAINED EARNINGS | ||||||
Accounting Policies [Abstract] | ||||||
Cumulative effect of new accounting principle in period of adoption, net of tax | $ 3 |
Goodwill, Customer Relationsh_3
Goodwill, Customer Relationships and Other Intangible Assets - Schedule of Goodwill (Details) - USD ($) $ in Millions | Jun. 30, 2021 | Dec. 31, 2020 |
Finite-Lived Intangible Assets [Line Items] | ||
Goodwill | $ 9,360 | $ 9,360 |
Finite-lived intangible assets, net | 231 | 343 |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, net | 0 | 88 |
Accumulated amortization | 5,699 | 5,611 |
Other Intangible Assets | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, net | 231 | 255 |
Accumulated amortization | $ 1,842 | $ 1,831 |
Goodwill, Customer Relationsh_4
Goodwill, Customer Relationships and Other Intangible Assets - Additional Information (Details) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021USD ($) | Jun. 30, 2020USD ($) | Jun. 30, 2021USD ($)reporting_unit | Jun. 30, 2020USD ($) | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Number of reporting units | reporting_unit | 1 | |||
Intangible assets, gross (including goodwill) | $ 17,100 | $ 17,100 | ||
Amortization of intangible assets | $ 22 | $ 121 | $ 132 | $ 245 |
Goodwill, Customer Relationsh_5
Goodwill, Customer Relationships and Other Intangible Assets - Schedule of Future Amortization Expense (Details) $ in Millions | Jun. 30, 2021USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
2021 (remaining six months) | $ 43 |
2022 | 85 |
2023 | 60 |
2024 | 12 |
2025 | $ 10 |
Revenue Recognition - Additiona
Revenue Recognition - Additional Information - Overview (Details) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021USD ($)category | Jun. 30, 2020USD ($) | Jun. 30, 2021USD ($) | Jun. 30, 2020USD ($) | |
Revenue from Contract with Customer [Abstract] | ||||
Number of categories of products and services | category | 4 | |||
Disaggregation of Revenue [Line Items] | ||||
Total operating revenues | $ 1,724 | $ 1,799 | $ 3,516 | $ 3,717 |
Voice and Other - CAF Phase II [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Total operating revenues | $ 73 |
Revenue Recognition - Disaggreg
Revenue Recognition - Disaggregation of Revenue (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | $ 1,724 | $ 1,799 | $ 3,516 | $ 3,717 |
Adjustments for non-ASC 606 revenue | (118) | (121) | (237) | (242) |
Total Revenue from Contracts with Customers | $ 1,606 | $ 1,678 | $ 3,279 | $ 3,475 |
Percent of operating revenue | 5.00% | 4.00% | 4.00% | 4.00% |
Voice and Other [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | $ 530 | $ 569 | $ 1,073 | $ 1,159 |
Adjustments for non-ASC 606 revenue | (83) | (87) | (168) | (176) |
Total Revenue from Contracts with Customers | 447 | 482 | 905 | 983 |
Fiber Infrastructure [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | 501 | 509 | 1,005 | 1,022 |
Adjustments for non-ASC 606 revenue | (29) | (33) | (60) | (64) |
Total Revenue from Contracts with Customers | 472 | 476 | 945 | 958 |
IP & Data Services [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | 116 | 129 | 239 | 261 |
Adjustments for non-ASC 606 revenue | 0 | 0 | 0 | 0 |
Total Revenue from Contracts with Customers | 116 | 129 | 239 | 261 |
Affiliate Services [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | 577 | 592 | 1,199 | 1,275 |
Adjustments for non-ASC 606 revenue | (6) | (1) | (9) | (2) |
Total Revenue from Contracts with Customers | $ 571 | $ 591 | $ 1,190 | $ 1,273 |
Revenue Recognition - Operating
Revenue Recognition - Operating Lease Revenue (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Revenue from Contract with Customer [Abstract] | ||||
Lease income | $ 78 | $ 78 | $ 157 | $ 157 |
Percent of operating revenue | 5.00% | 4.00% | 4.00% | 4.00% |
Revenue Recognition - Customer
Revenue Recognition - Customer Receivables and Contract Balances (Details) - USD ($) $ in Millions | Jun. 30, 2021 | Dec. 31, 2020 |
Revenue from Contract with Customer [Abstract] | ||
Customer receivables | $ 304 | $ 346 |
Contract assets | 11 | 13 |
Contract liabilities | 323 | 300 |
Accounts receivable, gross | 340 | 396 |
Allowance for doubtful accounts | $ 36 | $ 50 |
Revenue Recognition - Additio_2
Revenue Recognition - Additional Information - Customer Receivables and Contract Balances (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Customer Receivables and Contract Balances [Line Items] | ||||
Revenue recognized from prior year contract liability | $ 12 | $ 13 | $ 175 | $ 197 |
Minimum | ||||
Customer Receivables and Contract Balances [Line Items] | ||||
Contract term | 1 year | |||
Maximum | ||||
Customer Receivables and Contract Balances [Line Items] | ||||
Contract term | 5 years |
Revenue Recognition - Additio_3
Revenue Recognition - Additional Information, Performance Obligation (Details) $ in Millions | Jun. 30, 2021USD ($) |
Revenue from Contract with Customer [Abstract] | |
Remaining performance obligation | $ 204 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-07-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation, percentage | 90.00% |
Expected timing of satisfaction, period | 2 years 6 months |
Revenue Recognition - Contract
Revenue Recognition - Contract Costs (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Acquisition Costs | ||||
Capitalized Contract Cost | ||||
Beginning of period balance | $ 69 | $ 84 | $ 73 | $ 86 |
Costs incurred | 13 | 13 | 24 | 27 |
Amortization | (14) | (16) | (29) | (32) |
End of period balance | 68 | 81 | 68 | 81 |
Fulfillment Costs | ||||
Capitalized Contract Cost | ||||
Beginning of period balance | 52 | 61 | 54 | 64 |
Costs incurred | 6 | 6 | 12 | 12 |
Amortization | (9) | (8) | (17) | (17) |
End of period balance | $ 49 | $ 59 | $ 49 | $ 59 |
Revenue Recognition - Additio_4
Revenue Recognition - Additional Information - Contract Costs (Details) - Weighted Average | 6 Months Ended |
Jun. 30, 2021 | |
Mass Markets Customers, Average Contract Life | |
Contract Costs [Line Items] | |
Length of customer life | 30 months |
Business Customer, Average Contract Life | |
Contract Costs [Line Items] | |
Length of customer life | 29 months |
Credit Losses on Financial In_3
Credit Losses on Financial Instruments (Details) $ in Millions | 6 Months Ended |
Jun. 30, 2021USD ($) | |
Financing Receivable, Allowance for Credit Loss [Roll Forward] | |
Beginning balance | $ 61 |
Provision for expected losses | 12 |
Write-offs charged against the allowance | (38) |
Recoveries collected | 9 |
Ending balance | 44 |
Consumer Reclassed to Mass Market | |
Financing Receivable, Allowance for Credit Loss [Roll Forward] | |
Beginning balance | 32 |
Business Reclassed to Mass Markets | |
Financing Receivable, Allowance for Credit Loss [Roll Forward] | |
Beginning balance | 4 |
Mass Market Portfolio | |
Financing Receivable, Allowance for Credit Loss [Roll Forward] | |
Beginning balance | 36 |
Provision for expected losses | 7 |
Write-offs charged against the allowance | (27) |
Recoveries collected | 8 |
Ending balance | 24 |
Business Portfolio | |
Financing Receivable, Allowance for Credit Loss [Roll Forward] | |
Beginning balance | 25 |
Provision for expected losses | 5 |
Write-offs charged against the allowance | (11) |
Recoveries collected | 1 |
Ending balance | $ 20 |
Long-Term Debt and Note Payab_3
Long-Term Debt and Note Payable - Affiliate - Schedule of Long Term Debt (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2021 | Dec. 31, 2020 | |
Long-term debt | ||
Long-term debt, gross | $ 3,153 | |
Unamortized premiums, net | 5 | $ 5 |
Unamortized debt issuance costs | (53) | (62) |
Less current maturities | (949) | (948) |
Long-term debt, excluding current maturities | 2,156 | 2,386 |
Note payable - affiliate | 1,158 | 1,130 |
Long-term Debt and Lease Obligation, Including Current Maturities, Total | 3,105 | 3,334 |
Senior notes | ||
Long-term debt | ||
Long-term debt, gross | $ 2,935 | 3,170 |
Senior notes | Minimum | ||
Long-term debt | ||
Stated interest rate | 6.50% | |
Senior notes | Maximum | ||
Long-term debt | ||
Stated interest rate | 7.75% | |
Term loan | ||
Long-term debt | ||
Long-term debt, gross | $ 215 | $ 215 |
Weighted average interest rate | 2.11% | 2.15% |
Term loan | London Interbank Offered Rate (LIBOR) | ||
Long-term debt | ||
Basis spread on variable rate | 2.00% | |
Finance lease and other obligations | ||
Long-term debt | ||
Long-term debt, gross | $ 3 | $ 6 |
Note payable - affiliate | Affiliated entity | ||
Long-term debt | ||
Note payable - affiliate | $ 1,158 | $ 1,130 |
Weighted average interest rate | 4.883% |
Long-Term Debt and Note Payab_4
Long-Term Debt and Note Payable - Affiliate - Schedule of Debt Maturity (Details) $ in Millions | Jun. 30, 2021USD ($) |
Debt Disclosure [Abstract] | |
2021 (remaining six months) | $ 951 |
2022 | 1 |
2023 | 0 |
2024 | 0 |
2025 | 250 |
2026 and thereafter | 1,951 |
Total long-term debt | $ 3,153 |
Long-Term Debt and Note Payab_5
Long-Term Debt and Note Payable - Affiliate - Additional Information (Details) - USD ($) | 6 Months Ended | ||||
Jun. 30, 2021 | Jun. 30, 2020 | Feb. 16, 2021 | Dec. 31, 2020 | Sep. 30, 2017 | |
Long-term debt | |||||
Net loss on early retirement of debt | $ 8,000,000 | $ 19,000,000 | |||
Note payable - affiliate | 1,158,000,000 | $ 1,130,000,000 | |||
Senior notes | |||||
Long-term debt | |||||
Net loss on early retirement of debt | 8,000,000 | ||||
Note payable - affiliate | Affiliated entity | |||||
Long-term debt | |||||
Note payable - affiliate | 1,158,000,000 | $ 1,130,000,000 | |||
Note payable - affiliate | Affiliated entity | Qwest Corporation | |||||
Long-term debt | |||||
Note payable - affiliate funding commitment | $ 965,000,000 | ||||
Note payable - affiliate | 1,200,000,000 | ||||
Accrued interest on note payable - affiliate | $ 28,000,000 | ||||
7.000% Notes Due 2056 | Senior notes | |||||
Long-term debt | |||||
Repurchased face amount | $ 235,000,000 | ||||
Stated interest rate | 7.00% |
Fair Value Disclosure (Details)
Fair Value Disclosure (Details) - Fair value measurements, nonrecurring - Fair value inputs, Level 2 - USD ($) $ in Millions | Jun. 30, 2021 | Dec. 31, 2020 |
Carrying Amount | ||
Liabilities | ||
Liabilities—Long-term debt (excluding finance lease and other obligations) | $ 3,102 | $ 3,328 |
Fair Value | ||
Liabilities | ||
Liabilities—Long-term debt (excluding finance lease and other obligations) | $ 3,304 | $ 3,532 |
Commitments, Contingencies an_2
Commitments, Contingencies and Other Items (Details) plaintiff in Thousands | 3 Months Ended | 6 Months Ended |
Jun. 30, 2021USD ($)patent | Jun. 30, 2021USD ($)plaintiff | |
Loss Contingencies [Line Items] | ||
Estimate of possible loss | $ | $ 19,000,000 | $ 19,000,000 |
Loss Contingency, Patents Allegedly Infringed, Number | patent | 1 | |
Unfavorable Regulatory Action | ||
Loss Contingencies [Line Items] | ||
Estimate of possible loss | $ | $ 300,000 | $ 300,000 |
Minnesota Consumer Class Actions | U.S. District Court for the District of Minnesota | ||
Loss Contingencies [Line Items] | ||
Loss Contingency, Number Of Plaintiffs Elected To Opt Out | plaintiff | 12 | |
Number of potential class members | plaintiff | 11 |
Dividends (Details)
Dividends (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Dividends [Abstract] | ||
Dividends declared and paid to Qwest Services Corporation | $ 570 | $ 925 |
Other Financial Information- Ot
Other Financial Information- Other Current Assets (Details) - USD ($) $ in Millions | Jun. 30, 2021 | Dec. 31, 2020 |
Prepaid Expense and Other Assets, Current [Abstract] | ||
Prepaid expenses | $ 56 | $ 40 |
Contract acquisition costs | 45 | 47 |
Contract fulfillment costs | 30 | 28 |
Other | 6 | 7 |
Total other current assets | $ 137 | $ 122 |
Other Financial Information - O
Other Financial Information - Other Non-current Liabilities (Details) - USD ($) $ in Millions | Jun. 30, 2021 | Dec. 31, 2020 |
Deferred Credits and Other Liabilities [Abstract] | ||
Unrecognized tax benefits | $ 455 | $ 448 |
Deferred revenue | 110 | 108 |
Noncurrent operating lease liability | 67 | 76 |
Other | 55 | 53 |
Total other noncurrent liabilities | $ 687 | $ 685 |
Labor Union Contracts (Details)
Labor Union Contracts (Details) | 6 Months Ended |
Jun. 30, 2021 | |
Union employees concentration risk | Employees covered under collective bargaining agreements | |
Labor Union Contracts | |
Concentration risk percentage | 44.00% |
Uncategorized Items - lumn-2021
Label | Element | Value |
Accounting Standards Update [Extensible Enumeration] | us-gaap_AccountingStandardsUpdateExtensibleList | Accounting Standards Update 2016-13 [Member] |