Cover Page
Cover Page | 6 Months Ended |
Jun. 30, 2022 shares | |
Cover [Abstract] | |
Document Type | 10-Q |
Document Quarterly Report | true |
Document Period End Date | Jun. 30, 2022 |
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 | 2022 |
Document Fiscal Period Focus | Q2 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
OPERATING REVENUE | ||||
Operating revenues | $ 1,953 | $ 1,985 | $ 3,899 | $ 3,974 |
OPERATING EXPENSES | ||||
Cost of services and products (exclusive of depreciation and amortization) | 836 | 868 | 1,687 | 1,746 |
Selling, general and administrative | 318 | 273 | 632 | 567 |
Operating expenses - affiliates | 162 | 131 | 308 | 238 |
Depreciation and amortization | 405 | 436 | 801 | 873 |
Total operating expenses | 1,721 | 1,708 | 3,428 | 3,424 |
OPERATING INCOME | 232 | 277 | 471 | 550 |
OTHER (EXPENSE) INCOME | ||||
Interest income - affiliate | 15 | 15 | 31 | 33 |
Interest expense | (95) | (89) | (185) | (182) |
Other (expense) income, net | (14) | 6 | (21) | 10 |
Total other expense, net | (94) | (68) | (175) | (139) |
INCOME BEFORE INCOME TAXES | 138 | 209 | 296 | 411 |
Income tax expense | 41 | 62 | 85 | 113 |
NET INCOME | 97 | 147 | 211 | 298 |
Non-Affiliate Revenue | ||||
OPERATING REVENUE | ||||
Operating revenues | 1,896 | 1,929 | 3,786 | 3,863 |
Affiliate Services | ||||
OPERATING REVENUE | ||||
Operating revenues | $ 57 | $ 56 | $ 113 | $ 111 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Statement of Comprehensive Income [Abstract] | ||||
NET INCOME | $ 97 | $ 147 | $ 211 | $ 298 |
OTHER COMPREHENSIVE (LOSS) INCOME | ||||
Foreign currency translation adjustments, net of $32, $(4), $42, and $3 tax | (184) | 80 | (115) | (8) |
Other comprehensive (loss) income, net of tax | (184) | 80 | (115) | (8) |
COMPREHENSIVE (LOSS) INCOME | $ (87) | $ 227 | $ 96 | $ 290 |
CONSOLIDATED STATEMENTS OF CO_2
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Statement of Comprehensive Income [Abstract] | ||||
Foreign currency translation adjustments, tax effect | $ 32 | $ (4) | $ 42 | $ 3 |
CONSOLIDATED BALANCE SHEETS (UN
CONSOLIDATED BALANCE SHEETS (UNAUDITED) - USD ($) $ in Millions | Jun. 30, 2022 | Dec. 31, 2021 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 154 | $ 146 |
Accounts receivable, less allowance of $37 and $39 | 580 | 642 |
Note receivable - affiliate | 1,468 | 1,468 |
Assets held for sale | 2,865 | 2,708 |
Other | 263 | 239 |
Total current assets | 5,330 | 5,203 |
Property, plant and equipment, net of accumulated depreciation of $3,547 and $3,202 | 8,936 | 9,042 |
GOODWILL AND OTHER ASSETS | ||
Goodwill | 6,627 | 6,666 |
Other intangible assets, net | 5,387 | 5,725 |
Other, net | 1,681 | 1,459 |
Total goodwill and other assets | 13,695 | 13,850 |
TOTAL ASSETS | 27,961 | 28,095 |
CURRENT LIABILITIES | ||
Current maturities of long-term debt | 28 | 26 |
Accounts payable | 428 | 381 |
Accounts payable - affiliates | 77 | 18 |
Accrued expenses and other liabilities | ||
Salaries and benefits | 126 | 176 |
Income and other taxes | 92 | 83 |
Current operating lease liabilities | 353 | 299 |
Other | 117 | 150 |
Liabilities held for sale | 479 | 435 |
Current portion of deferred revenue | 298 | 291 |
Total current liabilities | 1,998 | 1,859 |
LONG-TERM DEBT | 10,383 | 10,396 |
DEFERRED REVENUE AND OTHER LIABILITIES | ||
Deferred revenue | 1,442 | 1,404 |
Operating lease liabilities | 1,134 | 953 |
Other | 452 | 474 |
Total deferred revenue and other liabilities | 3,028 | 2,831 |
COMMITMENTS AND CONTINGENCIES (Note 8) | ||
MEMBER'S EQUITY | ||
Member's equity | 13,018 | 13,360 |
Accumulated other comprehensive loss | (466) | (351) |
Total member's equity | 12,552 | 13,009 |
TOTAL LIABILITIES AND MEMBER'S EQUITY | $ 27,961 | $ 28,095 |
CONSOLIDATED BALANCE SHEETS (_2
CONSOLIDATED BALANCE SHEETS (UNAUDITED) - (Parenthetical) - USD ($) $ in Millions | Jun. 30, 2022 | Dec. 31, 2021 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 37 | $ 39 |
Accumulated depreciation | $ 3,547 | $ 3,202 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
OPERATING ACTIVITIES | ||||
Net income | $ 97 | $ 147 | $ 211 | $ 298 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||||
Depreciation and amortization | 405 | 436 | 801 | 873 |
Deferred income taxes | 54 | 92 | ||
Changes in current assets and liabilities: | ||||
Accounts receivable | 33 | (26) | ||
Accounts payable | (29) | (9) | ||
Other assets and liabilities, net | (113) | (74) | ||
Other assets and liabilities, affiliate | 85 | (499) | ||
Changes in other noncurrent assets and liabilities, net | 64 | 13 | ||
Other, net | 78 | (35) | ||
Net cash provided by operating activities | 1,184 | 633 | ||
INVESTING ACTIVITIES | ||||
Capital expenditures | (554) | (591) | ||
Proceeds from sale of property, plant and equipment and other assets | 1 | 52 | ||
Net cash used in investing activities | (553) | (539) | ||
FINANCING ACTIVITIES | ||||
Net proceeds from issuance of long-term debt | 0 | 891 | ||
Distributions | (553) | (25) | ||
Payments of long-term debt | (64) | (925) | ||
Other | 0 | (1) | ||
Net cash used in financing activities | (617) | (60) | ||
Net increase in cash, cash equivalents and restricted cash | 14 | 34 | ||
Cash, cash equivalents and restricted cash at beginning of period | 191 | 205 | ||
Cash, cash equivalents and restricted cash at end of period | 205 | 239 | 205 | 239 |
Supplemental cash flow information: | ||||
Income taxes paid, net | (23) | (16) | ||
Interest paid (net of capitalized interest of $8 and $8) | (182) | (190) | ||
Cash, cash equivalents and restricted cash: | ||||
Cash and cash equivalents | 154 | 233 | 154 | 233 |
Cash and cash equivalents included in assets held for sale | 48 | 0 | 48 | 0 |
Restricted cash included in Other current assets | 1 | 2 | 1 | 2 |
Restricted cash included in Other, net noncurrent assets | 2 | 4 | 2 | 4 |
Total | $ 205 | $ 239 | $ 205 | $ 239 |
CONSOLIDATED STATEMENTS OF CA_2
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (Parenthetical) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
Statement of Cash Flows [Abstract] | ||
Capitalized interest | $ 8 | $ 8 |
CONSOLIDATED STATEMENTS OF MEMB
CONSOLIDATED STATEMENTS OF MEMBER'S EQUITY (UNAUDITED) - USD ($) $ in Millions | Total | MEMBER'S EQUITY | ACCUMULATED OTHER COMPREHENSIVE LOSS |
Balance at beginning of period at Dec. 31, 2020 | $ 13,139 | $ (234) | |
MEMBER'S EQUITY | |||
Net income | $ 298 | 298 | |
Distributions | (25) | ||
Other comprehensive (loss) income | (8) | (8) | |
Balance at end of period at Jun. 30, 2021 | 13,170 | 13,412 | (242) |
Balance at beginning of period at Mar. 31, 2021 | 13,290 | (322) | |
MEMBER'S EQUITY | |||
Net income | 147 | 147 | |
Distributions | (25) | ||
Other comprehensive (loss) income | 80 | 80 | |
Balance at end of period at Jun. 30, 2021 | 13,170 | 13,412 | (242) |
Balance at beginning of period at Dec. 31, 2021 | 13,009 | 13,360 | (351) |
MEMBER'S EQUITY | |||
Net income | 211 | 211 | |
Distributions | (553) | ||
Other comprehensive (loss) income | (115) | (115) | |
Balance at end of period at Jun. 30, 2022 | 12,552 | 13,018 | (466) |
Balance at beginning of period at Mar. 31, 2022 | 13,264 | (282) | |
MEMBER'S EQUITY | |||
Net income | 97 | 97 | |
Distributions | (343) | ||
Other comprehensive (loss) income | (184) | (184) | |
Balance at end of period at Jun. 30, 2022 | $ 12,552 | $ 13,018 | $ (466) |
Background
Background | 6 Months Ended |
Jun. 30, 2022 | |
Accounting Policies [Abstract] | |
Background | Background General We are an international facilities-based technology communications provider (that is, a provider that owns or leases a substantial portion of the property, plant and equipment necessary to provide our services) of a broad range of integrated communications services. We created our communications network by constructing our own assets and through a combination of purchasing other companies and purchasing or leasing facilities from others. We designed our network to provide communications services that employ and take advantage of rapidly improving underlying optical, Internet Protocol, computing and storage technologies. Basis of Presentation Our consolidated balance sheet as of December 31, 2021, which was derived from our audited consolidated financial statements, and our unaudited interim consolidated financial statements provided herein have been prepared in accordance with the instructions for Form 10-Q. Certain information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") have been condensed or omitted pursuant to rules and regulations of the U.S. Securities and Exchange Commission ("SEC"). However, in our opinion, the disclosures made therein are adequate to make the information presented not misleading. We believe these consolidated financial statements include all normal recurring adjustments necessary to fairly present the results for the interim periods. The consolidated results of operations and cash flows for the first six months of the year are not necessarily indicative of the consolidated results of operations and cash flows that might be expected for the entire year. These consolidated financial statements and the accompanying notes should be read in conjunction with the audited consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2021. 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. Operating lease assets are included in other, net 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, 2021. Recently Adopted Accounting Pronouncements Government Assistance On January 1, 2022, we adopted Accounting Standards Update ("ASU") 2021-10, " Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance ” (“ASU 2020-10”). This ASU increases transparency in financial reporting by requiring business entities to disclose information about certain types of government assistance they receive. The ASU only impacts annual financial statement note disclosures. Therefore, the adoption of ASU 2021-10 did not have a material impact to our consolidated financial statements. Leases On January 1, 2022, we adopted ASU 2021-05, “ Leases (Topic 842): Lessors—Certain Leases with Variable Lease Payments ” (“ASU 2021-05”). This ASU (i) amends the lease classification requirements for lessors to align them with practice under ASC Topic 840, (ii) provides criteria for lessors to classify and account for a lease with variable lease payments that do not depend on a reference index or a rate as an operating lease; and (iii) provides guidance with respect to net investments by lessors under operating leases and other related topics. The adoption of ASU 2021-05 did not have a material impact to our consolidated financial statements. 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 guidance to reflect SEC Release No. 33-10762, which includes amendments to the financial disclosure requirements applicable to registered debt offerings that include credit enhancements, such as subsidiary guarantees. The adoption of ASU 2020-09 did not have a material impact to our consolidated financial statements. Investments On January 1, 2021, we adopted ASU 2020-01, “ Investments—Equity Securities (Topic 321), Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) ” ("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, 2022, we determined there was no application or discontinuation of the equity method during the reporting periods covered by this report. The adoption of ASU 2020-01 did not have a material impact to our consolidated financial statements. Income Taxes On January 1, 2021, we adopted ASU 2019-12, “ Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes” (“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. Recently Issued Accounting Pronouncements In March 2022, the Financial Accounting Standards Board ("FASB") issued ASU 2022-02, “ Financial Instruments-Credit Losses (Topic 326): Troubled Debt Restructurings (“TDR”) and Vintage Disclosures ” (“ASU 2022-02”). These amendments eliminate the TDR recognition and measurement guidance, enhance existing disclosure requirements and introduce new requirements related to certain modifications of receivables made to borrowers experiencing financial difficulty. ASU 2020-02 will become effective for us in the first quarter of fiscal 2023 and early adoption is permitted. As of June 30, 2022, we do not expect ASU 2022-02 to have an impact to our consolidated financial statements. In March 2022, the FASB issued ASU 2022-01, “ Derivatives and Hedging (Topic 815): Fair Value Hedging-Portfolio Layer Method ” (ASU 2022-01). The ASU expands the current single-layer method to allow multiple hedged layers of a single closed portfolio under the method. ASU 2020-01 will become effective for us in the first quarter of fiscal 2023 and early adoption is permitted. As of June 30, 2022, we do not expect ASU 2022-01 to have an impact to our consolidated financial statements. In October 2021, the FASB issued ASU 2021-08, “ Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers ” (“ASU 2021-08”), which requires entities to apply Topic 606 to recognize and measure contract assets and contract liabilities in a business combination. ASU 2021-08 will become effective for us in the first quarter of fiscal 2023 and early adoption is permitted. As of June 30, 2022, we do not expect ASU 2021-08 to have an impact to our consolidated financial statements. In January 2021, the FASB issued ASU 2021-01, " Reference Rate Reform (Topic 848): Scope" ("ASU 2021-01"), which clarifies that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition. ASU 2021-01 also amends the expedients and exceptions in Topic 848 to capture the incremental consequences of the scope clarification and to tailor the existing guidance to derivative instruments affected by the discounting transition. These amendments may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022. ASU 2021-01 provides option guidance for a limited time to ease the potential burden in accounting for reference rate reform. Based on our review of our key material contracts through June 30, 2022, we do not expect ASU 2021-01 to have a material impact to our consolidated financial statements. |
Divestiture of Latin American B
Divestiture of Latin American Business | 6 Months Ended |
Jun. 30, 2022 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Divestiture of Latin American Business | Recently Completed Divestiture of the Latin American Business On August 1, 2022, affiliates of Level 3 Parent, LLC, an indirect wholly-owned subsidiary of Lumen Technologies, Inc., closed the sale of Lumen's Latin American business pursuant to a definitive agreement dated July 25, 2021. See Note 11—Subsequent Events for additional information regarding this divestiture. We do not believe this divestiture represents a strategic shift for Level 3. Therefore, the Latin American business does not meet the criteria to be classified as a discontinued operation. As a result, we continue to report our operating results for the Latin American business in our consolidated operating results through the disposal date. The pre-tax net income of the Latin American business is estimated to be as follows in the table below: Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 (Dollars in millions) Pre-tax net income $ 95 47 178 75 As of June 30, 2022 in the accompanying consolidated balance sheets, the assets and liabilities of our Latin American business (the "disposal group") are classified as held for sale and are measured at the lower of (i) the carrying value of the disposal group and (ii) the fair value of the disposal group less costs to sell. Effective with the designation of the disposal group as held for sale on July 25, 2021, we suspended recording depreciation of property, plant and equipment and amortization of finite-lived intangible assets and right-of-use assets while these assets are classified as held for sale. We estimate that we would have recorded an additional $48 million and $97 million of depreciation, intangible amortization, and amortization of right-of use assets for the three and six months ended June 30, 2022, respectively if the Latin American business did not meet the held for sale criteria. As a result of our evaluation of the recoverability of the carrying value of the assets and liabilities held for sale relative to the agreed upon sales price, adjusted for costs to sell, we did not record any estimated loss on disposal during the six months ended June 30, 2022. We re-evaluate the recoverability of the disposal group each reporting period through the disposal date. For information on the August 1, 2022 disposal of the Latin American business, see Note 11—Subsequent Events. The principal components of the held for sale assets and liabilities as of the dates below are as follows: June 30, 2022 December 31, 2021 (Dollars in millions) Assets held for sale Cash and cash equivalents $ 48 39 Accounts receivable, less allowance of $2 and $3 94 83 Other current assets 79 81 Property, plant and equipment, net accumulated depreciation of $431 and $434 1,714 1,591 Goodwill (1) 720 713 Customer relationships and other intangibles, net 130 126 Other non-current assets 80 75 Total assets held for sale $ 2,865 2,708 Liabilities held for sale Accounts payable $ 110 101 Salaries and benefits 21 23 Income and other taxes 37 27 Current portion of deferred revenue 27 26 Other current liabilities 7 7 Deferred income taxes, net 149 129 Other non-current liabilities 128 122 Total liabilities held for sale $ 479 435 ______________________________________________________________________ |
Goodwill, Customer Relationship
Goodwill, Customer Relationships and Other Intangible Assets | 6 Months Ended |
Jun. 30, 2022 | |
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, 2022 December 31, 2021 (Dollars in millions) Goodwill $ 6,627 6,666 Customer relationships, less accumulated amortization of $3,096 and $2,779 $ 4,977 5,325 Capitalized software, less accumulated amortization of $368 and $349 401 378 Trade names, less accumulated amortization of $122 and $109 9 22 Total other intangible assets, net $ 5,387 5,725 Our goodwill was derived from Lumen's acquisition of us where the purchase price exceeded the fair value of the net assets acquired. We assess our goodwill for impairment annually, or under certain circumstances, more frequently, such as when events or changes in circumstances indicate there may be impairment. We are required to write down the value of goodwill only when our assessment determines the carrying value of equity of our reporting unit exceeds its fair value. Our annual impairment assessment date for goodwill is October 31, at which date we assess goodwill at our reporting unit. In reviewing the criteria for reporting units, we have determined that we are one reporting unit. The following table shows the rollforward of goodwill from December 31, 2021 through June 30, 2022: (Dollars in millions) As of December 31, 2021 (1) $ 6,666 Effect of foreign currency exchange rate changes (39) As of June 30, 2022 (1) $ 6,627 _______________________________________________________________________________ (1) Goodwill at June 30, 2022 and December 31, 2021 is net of accumulated impairment loss of $3.6 billion. Total amortization expense for finite-lived intangible assets for the three months ended June 30, 2022 and 2021 totaled $186 million and $216 million, respectively, and for the six months ended June 30, 2022 and 2021, totaled $378 million and $427 million, respectively. As of June 30, 2022, the gross carrying amount of goodwill, customer relationships, capitalized software, indefinite-life and other intangible assets was $15.6 billion. We estimate that total amortization expense for intangible assets for the years ending December 31, 2022 through 2026 will be as provided in the table below. As a result of reclassifying our Latin American business as being held for sale on our June 30, 2022 consolidated balance sheet, the amounts presented below do not include the future amortization of the intangible assets for the business to be divested. See Note 2—Recently Completed Divestiture of the Latin American Business for more information. (Dollars in millions) 2022 (remaining six months) $ 367 2023 716 2024 712 2025 687 2026 643 |
Revenue Recognition
Revenue Recognition | 6 Months Ended |
Jun. 30, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition | Revenue Recognition We categorize our products and services and related revenue among the following categories: • Compute and Application Services , which include our Edge Cloud services, IT solutions, Unified Communications and Collaboration ("UC&C"), data center, content delivery network ("CDN") and managed security services; • IP and Data Services , which include Ethernet, IP, and VPN data networks, including software-defined wide area networks ("SD WAN") based services, Dynamic Connections and Hyper WAN; • Fiber Infrastructure Services , which include dark fiber, optical services and equipment; • Voice and Other , which include Time Division Multiplexing ("TDM") voice, private line and other legacy services; and • Affiliate Services, which include communications services provided to our affiliates that we also provide to our external customers. Disaggregated Revenue by Service Offering The following table provides disaggregation of revenue from contracts with customers based on service offering for the six months ended June 30, 2022 and 2021. It also shows the amount of revenue that is not subject to ASC 606, but is instead governed by other accounting standards: Three Months Ended June 30, 2022 Three Months Ended June 30, 2021 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) Compute and Application Services $ 283 (126) 157 283 (127) 156 IP and Data Services 883 — 883 888 — 888 Fiber Infrastructure Services 403 (57) 346 401 (55) 346 Voice and Other 327 (4) 323 357 (3) 354 Affiliate Services 57 (57) — 56 (56) — Total revenue $ 1,953 (244) 1,709 1,985 (241) 1,744 Six Months Ended June 30, 2022 Six Months Ended June 30, 2021 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) Compute and Application Services $ 560 (254) 306 563 (254) 309 IP and Data Services 1,769 — 1,769 1,769 — 1,769 Fiber Infrastructure Services 794 (111) 683 798 (108) 690 Voice and Other 663 (8) 655 733 (5) 728 Affiliate Services 113 (113) — 111 (111) — Total revenue $ 3,899 (486) 3,413 3,974 (478) 3,496 _____________________________________________________________________ (1) Includes lease revenue which is not within the scope of ASC 606. Operating Lease Income We lease various dark fiber, office facilities, colocation facilities, switching facilities, other network sites and service equipment to third parties under operating leases. Lease and sublease revenue are included in operating revenue in our consolidated statements of operations. For the three months ended June 30, 2022 and 2021, our gross rental income was $203 million and $202 million, which represents approximately 10% of our operating revenue for both periods. For the six months ended June 30, 2022 and 2021, our gross rental income was $406 million and $399 million, which represents approximately 10% of our operating revenue for both periods. Customer Receivables and Contract Balances The following table provides balances of customer receivables, contract assets and contract liabilities, net of amounts reclassified as held for sale as of June 30, 2022 and December 31, 2021: June 30, 2022 December 31, 2021 (Dollars in millions) Customer receivables (1) $ 577 640 Contract assets (2) 33 35 Contract liabilities (3) 254 247 _____________________________________________________________________ (1) Reflects gross customer receivables of $614 million and $679 million, net of allowance for credit losses of $37 million and $39 million, at June 30, 2022 and December 31, 2021, respectively. As of June 30, 2022 and December 31, 2021, these amounts exclude customer receivables reclassified as held for sale of $94 million and $83 million respectively. (2) As of June 30, 2022 and December 31, 2021, no amounts have been reclassified as held for sale. (3) As of June 30, 2022 and December 31, 2021, amounts exclude contract liabilities reclassified as held for sale of $59 million and $58 million respectively. Contract liabilities are consideration we have received from our customers or billed in advance of providing the goods or services promised in the future. We defer recognizing this consideration until we have satisfied the related performance obligation to the customer. Contract liabilities include recurring services billed one month in advance and installation and maintenance charges that are deferred and recognized over the actual or expected contract term, which typically ranges from one Performance Obligations As of June 30, 2022, we expect to recognize approximately $3.7 billion of revenue in the future related to performance obligations associated with existing customer contracts that are partially or wholly unsatisfied. We expect to recognize approximately 84% of this revenue through 2024, with the balance recognized thereafter. These amounts exclude (i) the value of unsatisfied performance obligations for contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed (for example, uncommitted usage or non-recurring charges associated with professional or technical services to be completed), (ii) contracts that are classified as leasing arrangements that are not subject to ASC 606 and (iii) the value of unsatisfied performance obligations for contracts which relate to our recently completed divestiture. Contract Costs The following table provides changes in our contract acquisition costs and fulfillment costs: Three Months Ended June 30, 2022 Three Months Ended June 30, 2021 Acquisition Costs Fulfillment Costs (1) Acquisition Costs Fulfillment Costs (Dollars in millions) Beginning of period balance $ 77 100 75 123 Costs incurred 14 22 15 23 Amortization (13) (20) (15) (22) Change in contract costs held for sale (1) — (1) — — End of period balance $ 78 101 75 124 Six Months Ended Six Months Ended Acquisition Costs Fulfillment Costs (1) Acquisition Costs Fulfillment Costs (Dollars in millions) Beginning of period balance $ 76 99 78 122 Costs incurred 29 43 29 46 Amortization (27) (40) (32) (44) Change in contract costs held for sale (1) — (1) — — End of period balance $ 78 101 75 124 (1) The beginning balance for both the three and six months ended June 30, 2022 excluded fulfillment costs reclassified as held for sale of $27 million, respectively. The ending balance for June 30, 2022 excluded fulfillment costs reclassified as held for sale of $28 million. Acquisition costs include commission fees paid to employees as a result of obtaining contracts. Fulfillment costs include third party and internal costs associated with the provision, installation and activation of services to customers, including labor and materials consumed for these activities. Deferred acquisition and fulfillment costs are amortized based on the transfer of services on a straight-line basis over the average expected contract life of approximately 34 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. |
Credit Losses on Financial Inst
Credit Losses on Financial Instruments | 6 Months Ended |
Jun. 30, 2022 | |
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 periodically monitor certain risk characteristics within our aggregated financial assets and revise their composition accordingly, to the extent internal and external risk factors change. We separately evaluate financial assets that do not share risk characteristics with other financial assets. Our financial assets measured at amortized cost primarily consist of accounts receivable. We use a loss rate method to estimate our allowance for credit losses. Our determination of the current expected credit loss rate begins with our review of historical loss experience as a percentage of accounts receivable. We measure our historical loss period based on the average days to recognize accounts receivable as credit losses. When asset specific characteristics and current conditions change from those in the historical period, due to changes in our credit and collections strategy, certain classes of aged balances, or credit loss and recovery policies, we perform a qualitative and quantitative assessment to adjust our historical loss rate. We use regression analysis to develop an expected loss rate using historical experience and economic data over a forecast period. We measure our forecast period based on the average days to collect payment on billed accounts receivable. To determine our current allowance for credit losses, we combine the historical and expected credit loss rates and apply them to our period end accounts receivable. If there is an unexpected deterioration of a customer's financial condition or an unexpected change in economic conditions, including macroeconomic events, we assess the need to adjust the allowance for credit losses. Any such resulting adjustments would affect earnings in the period that adjustments are made. The assessment of the correlation between historical observed default rates, current conditions and forecasted economic conditions requires judgment. Alternative interpretations of these factors could have resulted in different conclusions regarding 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 and we may use methodologies that differ from those used by other companies. The following table presents the activity of our allowance for credit losses for our accounts receivable portfolio: (Dollars in millions) Beginning balance at December 31, 2021 $ 39 Provision for expected losses 7 Write-offs charged against the allowance (12) Recoveries collected 2 Change in allowance in assets held for sale (1) 1 Ending balance at June 30, 2022 $ 37 (1) As of June 30, 2022 and December 31, 2021, amount excludes allowance for credit losses classified as held for sale of $2 million and $3 million, respectively. See Note 2—Recently Completed Divestiture of the Latin American Business. |
Long-Term Debt
Long-Term Debt | 6 Months Ended |
Jun. 30, 2022 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | Long-Term Debt The following chart reflects our consolidated long-term debt, including finance leases and other obligations, unamortized discounts and premiums, net and unamortized debt issuance costs, but excluding intercompany debt: Interest Rates (1) Maturities (1) June 30, 2022 December 31, 2021 (Dollars in millions) Level 3 Financing, Inc. Senior Secured Debt: (2) Senior notes 3.400% - 3.875% 2027 - 2029 $ 1,500 1,500 Tranche B 2027 Term Loan (3) LIBOR + 1.75% 2027 3,111 3,111 Senior Notes and other debt: Senior notes (4) 3.625% - 5.375% 2025 - 2029 5,515 5,515 Finance leases and other obligations Various Various 308 319 Unamortized premiums, net 30 34 Unamortized debt issuance costs (53) (57) Total long-term debt 10,411 10,422 Less current maturities (28) (26) Long-term debt, excluding current maturities $ 10,383 10,396 ______________________________________________________________________ (1) As of June 30, 2022. (2) See Note 7—Long-Term Debt in our Annual Report on Form 10-K for the year ended December 31, 2021 for a description of certain parent or subsidiary guarantees and liens securing this debt. (3) The Tranche B 2027 Term Loan had an interest rate of 3.416% and 1.854% as of June 30, 2022 and December 31, 2021, respectively. (4) This debt is fully and unconditionally guaranteed by certain affiliates of Level 3 Financing, Inc., including Level 3 Parent, LLC and Level 3 Communications, LLC . Long-Term Debt Maturities Set forth below is the aggregate principal amount of our long-term debt as of June 30, 2022 (excluding unamortized premiums, net, unamortized debt issuance costs, and intercompany debt), maturing during the following years: (Dollars in millions) 2022 (remaining six months) $ 17 2023 27 2024 32 2025 838 2026 811 2027 and thereafter 8,709 Total long-term debt $ 10,434 Covenants The term loan and senior notes of Level 3 Financing, Inc. contain extensive affirmative and negative covenants. Such covenants include, among other things and subject to certain significant exceptions, restrictions on their ability to declare or pay dividends, repay certain other indebtedness, create liens, incur additional indebtedness, make investments, engage in transactions with their affiliates including Lumen Technologies and its other subsidiaries, dispose of assets and merge or consolidate with any other person. Also, in connection with a "change of control" of Level 3 Parent, LLC, or Level 3 Financing, Inc., Level 3 Financing will be required to offer to repurchase or repay certain of its long-term debt at a price of 101% of the principal amount of debt repurchased or repaid, plus accrued and unpaid interest. Certain of Lumen's and our debt instruments contain cross-acceleration provisions. Compliance As of June 30, 2022, we believe we were in compliance with the provisions and financial covenants contained in our debt agreements in all material respects. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 6 Months Ended |
Jun. 30, 2022 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Our financial instruments consist of cash and cash equivalents, restricted cash, accounts receivable, accounts payable, note receivable-affiliate and long-term debt, excluding finance leases and other obligations. Due to their short-term nature, the carrying amounts of our cash and cash equivalents, restricted cash, accounts receivable, note receivable-affiliate and accounts payable approximate their fair values. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between independent and knowledgeable parties who are willing and able to transact for an asset or liability at the measurement date. We use valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs when determining fair value and then we rank the estimated values based on the reliability of the inputs used following the fair value hierarchy. We determined the fair values of our long-term debt, including the current portion, based primarily on inputs other than quoted market prices in active markets that are either directly or indirectly observable such as discounted future cash flows using current market interest rates. The three input levels in the hierarchy of fair value measurements are defined by the FASB are generally as follows: 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 financial liabilities as of June 30, 2022 and December 31, 2021, as well as the input level used to determine the fair values indicated below: June 30, 2022 December 31, 2021 Input Level Carrying Amount Fair Value Carrying Amount Fair Value (Dollars in millions) Liabilities-Long-term debt, excluding finance leases 2 $ 10,103 8,867 10,103 10,090 |
Commitments, Contingencies and
Commitments, Contingencies and Other Items | 6 Months Ended |
Jun. 30, 2022 | |
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, 2022 aggregated to approximately $44 million and are included in other current liabilities, other liabilities, or liabilities held for sale in our consolidated balance sheet as of such date. The establishment of an accrual does not mean that actual funds have been set aside to satisfy a given contingency. Thus, the resolution of a particular contingency for the amount accrued could have no effect on our results of operations but nonetheless could have an adverse effect on our cash flows. Telephone Consumer Protection Act Litigation In December 2020, Lumen was named as a defendant in Diana Mey v. CenturyLink Communications, LLC, et al., an action pending in the US District Court for the Northern District of West Virginia alleging violations of the Telephone Consumer Protection Act for delivering unsolicited calls to her mobile phone. She asserts claims on behalf of herself and a putative class of similarly situated persons. The complaint seeks damages, statutory awards, costs and fees, and other relief. We are defending the claims asserted. Peruvian Tax Litigation In 2005, the Peruvian tax authorities ("SUNAT") issued tax assessments against one of our Peruvian subsidiaries asserting $26 million of additional income tax withholding and value-added taxes ("VAT"), penalties and interest for calendar years 2001 and 2002 on the basis that the Peruvian subsidiary incorrectly documented its importations. In May 2021, the Company paid the remaining amount on the fractioning regimes entered into by the Company to pay the amount assessed while it was appealed. We challenged the assessments via administrative and then judicial review processes. In October 2011, the highest administrative review tribunal (the Tribunal) decided the central issue underlying the 2002 assessments in SUNAT's favor. We appealed the Tribunal's decision to the first judicial level, which decided the central issue in favor of Level 3. SUNAT and we filed cross-appeals with the court of appeal. In May 2017, the court of appeal issued a decision reversing the first judicial level. In June 2017, we filed an appeal of the decision to the Supreme Court of Justice, the final judicial level. Oral argument was held before the Supreme Court of Justice in October 2018. A decision on this case is pending. In October 2013, the Tribunal decided the central issue underlying the 2001 assessments in SUNAT’s favor. We appealed that decision to the first judicial level in Peru, which decided the central issue in favor of SUNAT. In June 2017, we filed an appeal with the court of appeals. In November 2017, the court of appeals issued a decision affirming the first judicial level and we filed an appeal of that decision to the Supreme Court of Justice. In May 2021, the Supreme Court of Justice issued its final decision in favor of the Company. The Company provided additional information to SUNAT regarding 2001 tax payments and, in June 2022, SUNAT notified the Company of its decision regarding the 2001 refund amount. In July 2022, the Company appealed that decision to the Tax Court. The appeal is pending. Brazilian Tax Claims The São Paulo and Rio de Janeiro state tax authorities have issued tax assessments against our Brazilian subsidiaries for the Tax on Distribution of Goods and Services (“ICMS”), mainly with respect to revenue from leasing certain assets and revenue from the provision of Internet access services by treating such activities as the provision of communications services, to which the ICMS tax applies. We filed objections to these assessments in both states, arguing, among other things that neither the lease of assets nor the provision of Internet access qualifies as “communication services” subject to ICMS. We have appealed to the respective state judicial courts the decisions by the respective state administrative courts that rejected our objections to these assessments. In cases in which state lower courts ruled partially in our favor finding that the lease assets are not subject to ICMS, the State appealed those rulings. In other cases, the assessment was affirmed at the first administrative level and we have appealed to the second administrative level. Other assessments are still pending state judicial decisions. We are vigorously contesting all such assessments in both states and view the assessment of ICMS on revenue from equipment leasing and Internet access to be without merit. We believe these assessments, if upheld, could result in a loss of up to $51 million as of June 30, 2022, in excess of the reserved accruals established for these matters. Other Proceedings, Disputes and Contingencies From time to time, we are involved in other proceedings incidental to our business, including patent infringement allegations, regulatory hearings relating primarily to our rates or services, actions relating to employee claims, various tax issues, environmental law issues, grievance hearings before labor regulatory agencies and miscellaneous third-party tort actions. We are currently defending several patent infringement lawsuits asserted against us by non-practicing entities, many of which are seeking substantial recoveries. These cases have progressed to various stages and one or more may go to trial within the next twelve months if they are not otherwise resolved. Where applicable, we are seeking full or partial indemnification from our vendors and suppliers. As with all litigation, we are vigorously defending these actions and, as a matter of course, are prepared to litigate these matters to judgment, as well as to evaluate and consider all reasonable settlement opportunities. We are subject to various foreign, federal, state and local environmental protection and health and safety laws. From time to time, we are subject to judicial and administrative proceedings brought by various governmental authorities under these laws. Several such proceedings are currently pending, but none is reasonably expected to exceed $300,000 in fines and penalties. The outcome of these other proceedings described under this heading is not predictable. However, based on current circumstances, we do not believe that the ultimate resolution of these other proceedings, after considering available defenses and any insurance coverage or indemnification rights, will have a material adverse effect on us. The matters listed in this Note do not reflect all of our contingencies. For additional information on our contingencies, see Note 16—Commitments, Contingencies and Other Items to the consolidated financial statements included in Item 8 of Part II of our Annual Report on Form 10-K for the year ended December 31, 2021. 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. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss | 6 Months Ended |
Jun. 30, 2022 | |
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 six months ended June 30, 2022: Pension Plans Foreign Currency Translation Adjustment and Other Total (Dollars in millions) Balance at December 31, 2021 $ 3 (354) (351) Other comprehensive loss, net of tax — (115) (115) Net other comprehensive loss — (115) (115) Balance at June 30, 2022 $ 3 (469) (466) The table below summarizes changes in accumulated other comprehensive loss recorded on our consolidated balance sheets by component for the six months ended June 30, 2021: Pension Plans Foreign Currency Translation Adjustment and Other Total (Dollars in millions) Balance at December 31, 2020 $ (13) (221) (234) Other comprehensive loss, net of tax — (8) (8) Net other comprehensive loss — (8) (8) Balance at June 30, 2021 $ (13) (229) (242) |
Other Financial Information
Other Financial Information | 6 Months Ended |
Jun. 30, 2022 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Other Financial Information | Other Financial Information Other Current Assets The following table presents details of other current assets reflected in our consolidated balance sheets: June 30, 2022 December 31, 2021 (Dollars in millions) Prepaid expenses $ 132 109 Contract fulfillment costs 49 48 Contract acquisition costs 46 45 Contract assets 26 28 Other 10 9 Total other current assets $ 263 239 _______________________________________________________________________________ (1) As of June 30, 2022 and December 31, 2021, other current assets excludes $79 million and $81 million respectively, that have been reclassified as held for sale. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2022 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events Divestiture of the Latin American Business On August 1, 2022, we completed the sale of our Latin American business to an affiliate of a fund advised by Stonepeak Partners LP in exchange for cash proceeds of approximately $2.7 billion subject to certain post-closing adjustments. We expect to recognize a gain on the transaction in operating income during the third quarter of 2022. In connection with the sale, Lumen has entered into a transition services agreement under which it will provide to the purchaser various support services and certain long-term agreements under which Lumen and the purchaser will provide to each other various network and other commercial services. Distributions to Parent As of the date of this report, $75 million of distributions were made to our parent in the third quarter of 2022. Tender Offer and Consent Solicitation On July 25, 2022, Lumen initiated a tender offer to repurchase (i) any and all of $1.575 billion aggregate principal amount of certain of our outstanding Level 3 Financing, Inc. senior notes and (ii) certain other Lumen Technologies, Inc. and affiliated subsidiary senior notes, subject to certain repurchase caps and sublimits and various other terms and conditions. This offer, which was made pursuant to an Offer to Purchase and Consent Solicitation Statement dated July 25, 2022, has an early tender date of August 5, 2022, and will expire on August 19, 2022, unless extended. In addition, we announced a consent solicitation to eliminate substantially all of the restrictive covenants, eliminate certain events of default, and modify certain redemption notice requirements contained in the respective indentures for Level 3 senior notes subject to the tender offer. Debt Repayment On August 3, 2022, we repaid approximately $700 million aggregate principal amount of our Tranche B 2027 Term Loan. |
Background (Policies)
Background (Policies) | 6 Months Ended |
Jun. 30, 2022 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation Our consolidated balance sheet as of December 31, 2021, which was derived from our audited consolidated financial statements, and our unaudited interim consolidated financial statements provided herein have been prepared in accordance with the instructions for Form 10-Q. Certain information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") have been condensed or omitted pursuant to rules and regulations of the U.S. Securities and Exchange Commission ("SEC"). However, in our opinion, the disclosures made therein are adequate to make the information presented not misleading. We believe these consolidated financial statements include all normal recurring adjustments necessary to fairly present the results for the interim periods. The consolidated results of operations and cash flows for the first six months of the year are not necessarily indicative of the consolidated results of operations and cash flows that might be expected for the entire year. These consolidated financial statements and the accompanying notes should be read in conjunction with the audited consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2021. 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. |
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 Government Assistance On January 1, 2022, we adopted Accounting Standards Update ("ASU") 2021-10, " Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance ” (“ASU 2020-10”). This ASU increases transparency in financial reporting by requiring business entities to disclose information about certain types of government assistance they receive. The ASU only impacts annual financial statement note disclosures. Therefore, the adoption of ASU 2021-10 did not have a material impact to our consolidated financial statements. Leases On January 1, 2022, we adopted ASU 2021-05, “ Leases (Topic 842): Lessors—Certain Leases with Variable Lease Payments ” (“ASU 2021-05”). This ASU (i) amends the lease classification requirements for lessors to align them with practice under ASC Topic 840, (ii) provides criteria for lessors to classify and account for a lease with variable lease payments that do not depend on a reference index or a rate as an operating lease; and (iii) provides guidance with respect to net investments by lessors under operating leases and other related topics. The adoption of ASU 2021-05 did not have a material impact to our consolidated financial statements. 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 guidance to reflect SEC Release No. 33-10762, which includes amendments to the financial disclosure requirements applicable to registered debt offerings that include credit enhancements, such as subsidiary guarantees. The adoption of ASU 2020-09 did not have a material impact to our consolidated financial statements. Investments On January 1, 2021, we adopted ASU 2020-01, “ Investments—Equity Securities (Topic 321), Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) ” ("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, 2022, we determined there was no application or discontinuation of the equity method during the reporting periods covered by this report. The adoption of ASU 2020-01 did not have a material impact to our consolidated financial statements. Income Taxes On January 1, 2021, we adopted ASU 2019-12, “ Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes” (“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. Recently Issued Accounting Pronouncements In March 2022, the Financial Accounting Standards Board ("FASB") issued ASU 2022-02, “ Financial Instruments-Credit Losses (Topic 326): Troubled Debt Restructurings (“TDR”) and Vintage Disclosures ” (“ASU 2022-02”). These amendments eliminate the TDR recognition and measurement guidance, enhance existing disclosure requirements and introduce new requirements related to certain modifications of receivables made to borrowers experiencing financial difficulty. ASU 2020-02 will become effective for us in the first quarter of fiscal 2023 and early adoption is permitted. As of June 30, 2022, we do not expect ASU 2022-02 to have an impact to our consolidated financial statements. In March 2022, the FASB issued ASU 2022-01, “ Derivatives and Hedging (Topic 815): Fair Value Hedging-Portfolio Layer Method ” (ASU 2022-01). The ASU expands the current single-layer method to allow multiple hedged layers of a single closed portfolio under the method. ASU 2020-01 will become effective for us in the first quarter of fiscal 2023 and early adoption is permitted. As of June 30, 2022, we do not expect ASU 2022-01 to have an impact to our consolidated financial statements. In October 2021, the FASB issued ASU 2021-08, “ Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers ” (“ASU 2021-08”), which requires entities to apply Topic 606 to recognize and measure contract assets and contract liabilities in a business combination. ASU 2021-08 will become effective for us in the first quarter of fiscal 2023 and early adoption is permitted. As of June 30, 2022, we do not expect ASU 2021-08 to have an impact to our consolidated financial statements. In January 2021, the FASB issued ASU 2021-01, " Reference Rate Reform (Topic 848): Scope" ("ASU 2021-01"), which clarifies that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition. ASU 2021-01 also amends the expedients and exceptions in Topic 848 to capture the incremental consequences of the scope clarification and to tailor the existing guidance to derivative instruments affected by the discounting transition. These amendments may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022. ASU 2021-01 provides option guidance for a limited time to ease the potential burden in accounting for reference rate reform. Based on our review of our key material contracts through June 30, 2022, we do not expect ASU 2021-01 to have a material impact to our consolidated financial statements. |
Goodwill | We assess our goodwill for impairment annually, or under certain circumstances, more frequently, such as when events or changes in circumstances indicate there may be impairment. We are required to write down the value of goodwill only when our assessment determines the carrying value of equity of our reporting unit exceeds its fair value. Our annual impairment assessment date for goodwill is October 31, at which date we assess goodwill at our reporting unit. |
Operating Lease Income | Operating Lease Income We lease various dark fiber, office facilities, colocation facilities, switching facilities, other network sites and service equipment to third parties under operating leases. Lease and sublease revenue are included in operating revenue in our consolidated statements of operations. |
Credit Losses on Financial Instruments | In accordance with ASC 326, " Financial Instruments - Credit Losses, " we aggregate financial assets with similar risk characteristics to align our expected credit losses with the credit quality or deterioration over the life of such assets. We periodically monitor certain risk characteristics within our aggregated financial assets and revise their composition accordingly, to the extent internal and external risk factors change. We separately evaluate financial assets that do not share risk characteristics with other financial assets. Our financial assets measured at amortized cost primarily consist of accounts receivable. |
Divestiture of Latin American_2
Divestiture of Latin American Business (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Components of pre-tax income and held for sale assets and liabilities | The pre-tax net income of the Latin American business is estimated to be as follows in the table below: Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 (Dollars in millions) Pre-tax net income $ 95 47 178 75 The principal components of the held for sale assets and liabilities as of the dates below are as follows: June 30, 2022 December 31, 2021 (Dollars in millions) Assets held for sale Cash and cash equivalents $ 48 39 Accounts receivable, less allowance of $2 and $3 94 83 Other current assets 79 81 Property, plant and equipment, net accumulated depreciation of $431 and $434 1,714 1,591 Goodwill (1) 720 713 Customer relationships and other intangibles, net 130 126 Other non-current assets 80 75 Total assets held for sale $ 2,865 2,708 Liabilities held for sale Accounts payable $ 110 101 Salaries and benefits 21 23 Income and other taxes 37 27 Current portion of deferred revenue 27 26 Other current liabilities 7 7 Deferred income taxes, net 149 129 Other non-current liabilities 128 122 Total liabilities held for sale $ 479 435 ______________________________________________________________________ |
Goodwill, Customer Relationsh_2
Goodwill, Customer Relationships and Other Intangible Assets (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of goodwill, customer relationships and other intangible assets | Goodwill, customer relationships and other intangible assets consisted of the following: June 30, 2022 December 31, 2021 (Dollars in millions) Goodwill $ 6,627 6,666 Customer relationships, less accumulated amortization of $3,096 and $2,779 $ 4,977 5,325 Capitalized software, less accumulated amortization of $368 and $349 401 378 Trade names, less accumulated amortization of $122 and $109 9 22 Total other intangible assets, net $ 5,387 5,725 |
Schedule of goodwill | The following table shows the rollforward of goodwill from December 31, 2021 through June 30, 2022: (Dollars in millions) As of December 31, 2021 (1) $ 6,666 Effect of foreign currency exchange rate changes (39) As of June 30, 2022 (1) $ 6,627 _______________________________________________________________________________ (1) Goodwill at June 30, 2022 and December 31, 2021 is net of accumulated impairment loss of $3.6 billion. |
Schedule of estimated amortization expense for intangible assets | We estimate that total amortization expense for intangible assets for the years ending December 31, 2022 through 2026 will be as provided in the table below. As a result of reclassifying our Latin American business as being held for sale on our June 30, 2022 consolidated balance sheet, the amounts presented below do not include the future amortization of the intangible assets for the business to be divested. See Note 2—Recently Completed Divestiture of the Latin American Business for more information. (Dollars in millions) 2022 (remaining six months) $ 367 2023 716 2024 712 2025 687 2026 643 |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of revenue | The following table provides disaggregation of revenue from contracts with customers based on service offering for the six months ended June 30, 2022 and 2021. It also shows the amount of revenue that is not subject to ASC 606, but is instead governed by other accounting standards: Three Months Ended June 30, 2022 Three Months Ended June 30, 2021 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) Compute and Application Services $ 283 (126) 157 283 (127) 156 IP and Data Services 883 — 883 888 — 888 Fiber Infrastructure Services 403 (57) 346 401 (55) 346 Voice and Other 327 (4) 323 357 (3) 354 Affiliate Services 57 (57) — 56 (56) — Total revenue $ 1,953 (244) 1,709 1,985 (241) 1,744 Six Months Ended June 30, 2022 Six Months Ended June 30, 2021 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) Compute and Application Services $ 560 (254) 306 563 (254) 309 IP and Data Services 1,769 — 1,769 1,769 — 1,769 Fiber Infrastructure Services 794 (111) 683 798 (108) 690 Voice and Other 663 (8) 655 733 (5) 728 Affiliate Services 113 (113) — 111 (111) — Total revenue $ 3,899 (486) 3,413 3,974 (478) 3,496 _____________________________________________________________________ (1) Includes lease revenue which is not within the scope of ASC 606. |
Contract with customer, asset and liability | The following table provides balances of customer receivables, contract assets and contract liabilities, net of amounts reclassified as held for sale as of June 30, 2022 and December 31, 2021: June 30, 2022 December 31, 2021 (Dollars in millions) Customer receivables (1) $ 577 640 Contract assets (2) 33 35 Contract liabilities (3) 254 247 _____________________________________________________________________ (1) Reflects gross customer receivables of $614 million and $679 million, net of allowance for credit losses of $37 million and $39 million, at June 30, 2022 and December 31, 2021, respectively. As of June 30, 2022 and December 31, 2021, these amounts exclude customer receivables reclassified as held for sale of $94 million and $83 million respectively. (2) As of June 30, 2022 and December 31, 2021, no amounts have been reclassified as held for sale. (3) As of June 30, 2022 and December 31, 2021, amounts exclude contract liabilities reclassified as held for sale of $59 million and $58 million respectively. |
Capitalized contract cost | The following table provides changes in our contract acquisition costs and fulfillment costs: Three Months Ended June 30, 2022 Three Months Ended June 30, 2021 Acquisition Costs Fulfillment Costs (1) Acquisition Costs Fulfillment Costs (Dollars in millions) Beginning of period balance $ 77 100 75 123 Costs incurred 14 22 15 23 Amortization (13) (20) (15) (22) Change in contract costs held for sale (1) — (1) — — End of period balance $ 78 101 75 124 Six Months Ended Six Months Ended Acquisition Costs Fulfillment Costs (1) Acquisition Costs Fulfillment Costs (Dollars in millions) Beginning of period balance $ 76 99 78 122 Costs incurred 29 43 29 46 Amortization (27) (40) (32) (44) Change in contract costs held for sale (1) — (1) — — End of period balance $ 78 101 75 124 (1) The beginning balance for both the three and six months ended June 30, 2022 excluded fulfillment costs reclassified as held for sale of $27 million, respectively. The ending balance for June 30, 2022 excluded fulfillment costs reclassified as held for sale of $28 million. |
Credit Losses on Financial In_2
Credit Losses on Financial Instruments (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Credit Loss [Abstract] | |
Activity in allowance for credit losses | The following table presents the activity of our allowance for credit losses for our accounts receivable portfolio: (Dollars in millions) Beginning balance at December 31, 2021 $ 39 Provision for expected losses 7 Write-offs charged against the allowance (12) Recoveries collected 2 Change in allowance in assets held for sale (1) 1 Ending balance at June 30, 2022 $ 37 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Debt Disclosure [Abstract] | |
Schedule of long-term debt | The following chart reflects our consolidated long-term debt, including finance leases and other obligations, unamortized discounts and premiums, net and unamortized debt issuance costs, but excluding intercompany debt: Interest Rates (1) Maturities (1) June 30, 2022 December 31, 2021 (Dollars in millions) Level 3 Financing, Inc. Senior Secured Debt: (2) Senior notes 3.400% - 3.875% 2027 - 2029 $ 1,500 1,500 Tranche B 2027 Term Loan (3) LIBOR + 1.75% 2027 3,111 3,111 Senior Notes and other debt: Senior notes (4) 3.625% - 5.375% 2025 - 2029 5,515 5,515 Finance leases and other obligations Various Various 308 319 Unamortized premiums, net 30 34 Unamortized debt issuance costs (53) (57) Total long-term debt 10,411 10,422 Less current maturities (28) (26) Long-term debt, excluding current maturities $ 10,383 10,396 ______________________________________________________________________ (1) As of June 30, 2022. (2) See Note 7—Long-Term Debt in our Annual Report on Form 10-K for the year ended December 31, 2021 for a description of certain parent or subsidiary guarantees and liens securing this debt. (3) The Tranche B 2027 Term Loan had an interest rate of 3.416% and 1.854% as of June 30, 2022 and December 31, 2021, respectively. (4) This debt is fully and unconditionally guaranteed by certain affiliates of Level 3 Financing, Inc., including Level 3 Parent, LLC and Level 3 Communications, LLC . |
Schedule of aggregate future contractual maturities of long-term debt and capital leases (excluding discounts) | Set forth below is the aggregate principal amount of our long-term debt as of June 30, 2022 (excluding unamortized premiums, net, unamortized debt issuance costs, and intercompany debt), maturing during the following years: (Dollars in millions) 2022 (remaining six months) $ 17 2023 27 2024 32 2025 838 2026 811 2027 and thereafter 8,709 Total long-term debt $ 10,434 |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Fair Value Disclosures [Abstract] | |
Schedule of carrying amounts and estimated fair values of long-term debt, excluding capital lease obligations, and input levels to determine fair values | The following table presents the carrying amounts and estimated fair values of our financial liabilities as of June 30, 2022 and December 31, 2021, as well as the input level used to determine the fair values indicated below: June 30, 2022 December 31, 2021 Input Level Carrying Amount Fair Value Carrying Amount Fair Value (Dollars in millions) Liabilities-Long-term debt, excluding finance leases 2 $ 10,103 8,867 10,103 10,090 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Loss (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Schedule of accumulated other comprehensive loss | The table below summarizes changes in accumulated other comprehensive loss recorded on our consolidated balance sheets by component for the six months ended June 30, 2022: Pension Plans Foreign Currency Translation Adjustment and Other Total (Dollars in millions) Balance at December 31, 2021 $ 3 (354) (351) Other comprehensive loss, net of tax — (115) (115) Net other comprehensive loss — (115) (115) Balance at June 30, 2022 $ 3 (469) (466) The table below summarizes changes in accumulated other comprehensive loss recorded on our consolidated balance sheets by component for the six months ended June 30, 2021: Pension Plans Foreign Currency Translation Adjustment and Other Total (Dollars in millions) Balance at December 31, 2020 $ (13) (221) (234) Other comprehensive loss, net of tax — (8) (8) Net other comprehensive loss — (8) (8) Balance at June 30, 2021 $ (13) (229) (242) |
Other Financial Information (Ta
Other Financial Information (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Schedule of components other current assets | The following table presents details of other current assets reflected in our consolidated balance sheets: June 30, 2022 December 31, 2021 (Dollars in millions) Prepaid expenses $ 132 109 Contract fulfillment costs 49 48 Contract acquisition costs 46 45 Contract assets 26 28 Other 10 9 Total other current assets $ 263 239 _______________________________________________________________________________ (1) As of June 30, 2022 and December 31, 2021, other current assets excludes $79 million and $81 million respectively, that have been reclassified as held for sale. |
Background - Basis of Presentat
Background - Basis of Presentation (Details) - USD ($) $ in Millions | Jun. 30, 2022 | Dec. 31, 2021 |
Lessee, Lease, Description [Line Items] | ||
Operating lease, right-of-use asset, Statement of Financial Position [Extensible Enumeration] | Other, net | Other, net |
Current operating lease liabilities | $ 353 | $ 299 |
Operating lease liabilities | 1,134 | 953 |
Affiliates | ||
Lessee, Lease, Description [Line Items] | ||
Operating lease assets | 418 | 294 |
Current operating lease liabilities | 112 | 82 |
Operating lease liabilities | $ 317 | $ 224 |
Background - Segments (Details)
Background - Segments (Details) | 6 Months Ended |
Jun. 30, 2022 segment | |
Accounting Policies [Abstract] | |
Number of reportable segments | 1 |
Divestiture of Latin American_3
Divestiture of Latin American Business - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Depreciation and amortization | $ 405 | $ 436 | $ 801 | $ 873 |
Disposal Group, Held-for-sale, Not Discontinued Operations | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Depreciation and amortization | $ 48 | $ 97 |
Divestiture of Latin American_4
Divestiture of Latin American Business - Pre-tax Net Income (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Disposal Group, Held-for-sale, Not Discontinued Operations | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Pre-tax net income | $ 95 | $ 47 | $ 178 | $ 75 |
Divestiture of Latin American_5
Divestiture of Latin American Business - Components of Held for Sale Assets and Liabilities (Details) - USD ($) $ in Millions | Jun. 30, 2022 | Dec. 31, 2021 | Jun. 30, 2021 |
Assets held for sale | |||
Cash and cash equivalents | $ 48 | $ 0 | |
Other current assets reclassified as held for sale | 79 | $ 81 | |
Disposal Group, Held-for-sale, Not Discontinued Operations | |||
Liabilities held for sale | |||
Allowance for doubtful accounts | 2 | 3 | |
Disposal Group, Held-for-sale, Not Discontinued Operations | Latin American Business | |||
Assets held for sale | |||
Cash and cash equivalents | 48 | 39 | |
Accounts receivable, less allowance of $2 and $3 | 94 | 83 | |
Other current assets reclassified as held for sale | 79 | 81 | |
Property, plant and equipment, net accumulated depreciation of $431 and $434 | 1,714 | 1,591 | |
Goodwill | 720 | 713 | |
Customer relationships and other intangibles, net | 130 | 126 | |
Other non-current assets | 80 | 75 | |
Total assets held for sale | 2,865 | 2,708 | |
Liabilities held for sale | |||
Accounts payable | 110 | 101 | |
Salaries and benefits | 21 | 23 | |
Income and other taxes | 37 | 27 | |
Current portion of deferred revenue | 27 | 26 | |
Other current liabilities | 7 | 7 | |
Deferred income taxes, net | 149 | 129 | |
Other non-current liabilities | 128 | 122 | |
Total liabilities held for sale | 479 | 435 | |
Allowance for doubtful accounts | 2 | 3 | |
Accumulated depreciation | $ 431 | $ 434 |
Goodwill, Customer Relationsh_3
Goodwill, Customer Relationships and Other Intangible Assets - Schedule of Goodwill and Other Intangible Assets (Details) - USD ($) $ in Millions | Jun. 30, 2022 | Dec. 31, 2021 |
Finite-Lived Intangible Assets [Line Items] | ||
Goodwill | $ 6,627 | $ 6,666 |
Other intangible assets, net | 5,387 | 5,725 |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Other intangible assets, net | 4,977 | 5,325 |
Accumulated amortization | 3,096 | 2,779 |
Capitalized software | ||
Finite-Lived Intangible Assets [Line Items] | ||
Other intangible assets, net | 401 | 378 |
Accumulated amortization | 368 | 349 |
Trade names | ||
Finite-Lived Intangible Assets [Line Items] | ||
Other intangible assets, net | 9 | 22 |
Accumulated amortization | $ 122 | $ 109 |
Goodwill, Customer Relationsh_4
Goodwill, Customer Relationships and Other Intangible Assets - Additional Information (Details) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 USD ($) | Jun. 30, 2021 USD ($) | Jun. 30, 2022 USD ($) reporting_unit | Jun. 30, 2021 USD ($) | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Number of reporting units | reporting_unit | 1 | |||
Acquired finite-lived intangible asset amortization expense | $ 186 | $ 216 | $ 378 | $ 427 |
Intangible assets, gross, including goodwill | $ 15,600 | $ 15,600 |
Goodwill, Customer Relationsh_5
Goodwill, Customer Relationships and Other Intangible Assets - Goodwill Activity (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2022 | Dec. 31, 2021 | |
Goodwill [Roll Forward] | ||
As of December 31, 2021 | $ 6,666 | |
Effect of foreign currency exchange rate changes | (39) | |
As of June 30, 2022 | 6,627 | |
Goodwill, accumulated impairment loss | $ 3,600 | $ 3,600 |
Goodwill, Customer Relationsh_6
Goodwill, Customer Relationships and Other Intangible Assets - Amortization Expense (Details) $ in Millions | Jun. 30, 2022 USD ($) |
Estimated amortization expense of finite-lived acquisition-related intangible assets | |
2022 (remaining six months) | $ 367 |
2023 | 716 |
2024 | 712 |
2025 | 687 |
2026 | $ 643 |
Revenue Recognition - Disaggreg
Revenue Recognition - Disaggregation of Revenue (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Disaggregation of Revenue [Line Items] | ||||
Total revenues | $ 1,953 | $ 1,985 | $ 3,899 | $ 3,974 |
Adjustments for non-ASC 606 revenue | (244) | (241) | (486) | (478) |
Total revenue from contracts with customers | 1,709 | 1,744 | 3,413 | 3,496 |
Compute and Application Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 283 | 283 | 560 | 563 |
Adjustments for non-ASC 606 revenue | (126) | (127) | (254) | (254) |
Total revenue from contracts with customers | 157 | 156 | 306 | 309 |
IP and Data Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 883 | 888 | 1,769 | 1,769 |
Adjustments for non-ASC 606 revenue | 0 | 0 | 0 | 0 |
Total revenue from contracts with customers | 883 | 888 | 1,769 | 1,769 |
Fiber Infrastructure Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 403 | 401 | 794 | 798 |
Adjustments for non-ASC 606 revenue | (57) | (55) | (111) | (108) |
Total revenue from contracts with customers | 346 | 346 | 683 | 690 |
Voice and Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 327 | 357 | 663 | 733 |
Adjustments for non-ASC 606 revenue | (4) | (3) | (8) | (5) |
Total revenue from contracts with customers | 323 | 354 | 655 | 728 |
Affiliate Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 57 | 56 | 113 | 111 |
Adjustments for non-ASC 606 revenue | (57) | (56) | (113) | (111) |
Total revenue from contracts with customers | $ 0 | $ 0 | $ 0 | $ 0 |
Revenue Recognition - Operating
Revenue Recognition - Operating Lease Income (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Revenue from Contract with Customer [Abstract] | ||||
Rental income | $ 203 | $ 202 | $ 406 | $ 399 |
Percent of operating revenue | 10% | 10% | 10% | 10% |
Revenue Recognition - Customer
Revenue Recognition - Customer Receivables and Contract Balances (Details) - USD ($) $ in Millions | Jun. 30, 2022 | Jan. 01, 2022 | Dec. 31, 2021 | Jan. 01, 2021 |
Capitalized Contract Cost [Line Items] | ||||
Customer receivables | $ 577 | $ 640 | ||
Contract assets | 33 | 35 | ||
Contract liabilities | 254 | $ 305 | 247 | $ 385 |
Accounts receivable, gross | 614 | 679 | ||
Allowance for credit losses | 37 | 39 | ||
Disposal Group, Held-for-sale, Not Discontinued Operations | ||||
Capitalized Contract Cost [Line Items] | ||||
Customer receivables | 94 | 83 | ||
Contract assets | 0 | 0 | ||
Contract liabilities | $ 59 | $ 58 |
Revenue Recognition - Additiona
Revenue Recognition - Additional Information - Customer Receivables and Contract Balances (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Jan. 01, 2022 | Dec. 31, 2021 | Jan. 01, 2021 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |||||||
Revenue recognized | $ 23 | $ 28 | $ 108 | $ 121 | |||
Contract liabilities | $ 254 | $ 254 | $ 305 | $ 247 | $ 385 | ||
Minimum | |||||||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |||||||
Contract term | 1 year | ||||||
Maximum | |||||||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |||||||
Contract term | 5 years |
Revenue Recognition - Additio_2
Revenue Recognition - Additional Information - Remaining Performance Obligation (Details) $ in Billions | Jun. 30, 2022 USD ($) |
Revenue from Contract with Customer [Abstract] | |
Remaining performance obligation | $ 3.7 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-07-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation, percentage | 84% |
Expected timing of satisfaction, period | 2 years 6 months |
Revenue Recognition - Contract
Revenue Recognition - Contract Cost (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Acquisition Costs | ||||
Capitalized Contract Cost [Roll Forward] | ||||
Beginning of period balance | $ 77 | $ 75 | $ 76 | $ 78 |
Costs incurred | 14 | 15 | 29 | 29 |
Amortization | (13) | (15) | (27) | (32) |
Change in contract costs held for sale (1) | 0 | 0 | 0 | 0 |
End of period balance | 78 | 75 | 78 | 75 |
Fulfillment Costs (1) | ||||
Capitalized Contract Cost [Roll Forward] | ||||
Beginning of period balance | 100 | 123 | 99 | 122 |
Costs incurred | 22 | 23 | 43 | 46 |
Amortization | (20) | (22) | (40) | (44) |
Change in contract costs held for sale (1) | (1) | 0 | (1) | 0 |
End of period balance | 101 | 124 | 101 | 124 |
Fulfillment Costs (1) | Discontinued Operations, Held-for-sale | ||||
Capitalized Contract Cost [Roll Forward] | ||||
Beginning of period balance | $ 27 | $ 27 | ||
End of period balance | $ 28 | $ 28 |
Revenue Recognition - Additio_3
Revenue Recognition - Additional Information - Contract Costs (Details) | 6 Months Ended |
Jun. 30, 2022 | |
Business Customers | Weighted Average | |
Contract Costs [Line Items] | |
Length of customer life | 34 months |
Credit Losses on Financial In_3
Credit Losses on Financial Instruments (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2022 | Dec. 31, 2021 | |
Financing Receivable, Allowance for Credit Loss [Roll Forward] | ||
Beginning balance at December 31, 2021 | $ 39 | |
Provision for expected losses | 7 | |
Write-offs charged against the allowance | (12) | |
Recoveries collected | 2 | |
Change in allowance in assets held for sale (1) | 1 | |
Ending balance at June 30, 2022 | 37 | |
Disposal Group, Held-for-sale, Not Discontinued Operations | ||
Financing Receivable, Allowance for Credit Loss [Roll Forward] | ||
Allowance for doubtful accounts | $ 2 | $ 3 |
Long-Term Debt - Schedule of Lo
Long-Term Debt - Schedule of Long Term Debt (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2022 | Dec. 31, 2021 | |
Long-term debt | ||
Long-term debt, gross | $ 10,434 | |
Unamortized premiums, net | 30 | $ 34 |
Unamortized debt issuance costs | (53) | (57) |
Long-term Debt and Lease Obligation, Including Current Maturities, Total | 10,411 | 10,422 |
Less current maturities | (28) | (26) |
Long-term debt, excluding current maturities | 10,383 | 10,396 |
Senior notes | Senior Notes Maturing 2027-2029 | ||
Long-term debt | ||
Long-term debt, gross | $ 1,500 | 1,500 |
Senior notes | Senior Notes Maturing 2027-2029 | Minimum | ||
Long-term debt | ||
Stated interest rate | 3.40% | |
Senior notes | Senior Notes Maturing 2027-2029 | Maximum | ||
Long-term debt | ||
Stated interest rate | 3.875% | |
Senior notes | Senior Notes Maturing 2025-2029 | ||
Long-term debt | ||
Long-term debt, gross | $ 5,515 | 5,515 |
Senior notes | Senior Notes Maturing 2025-2029 | Minimum | ||
Long-term debt | ||
Stated interest rate | 3.625% | |
Senior notes | Senior Notes Maturing 2025-2029 | Maximum | ||
Long-term debt | ||
Stated interest rate | 5.375% | |
Term loan | Tranche B 2027 Term Loan | ||
Long-term debt | ||
Long-term debt, gross | $ 3,111 | $ 3,111 |
Effective percentage | 3.416% | 1.854% |
Term loan | Tranche B 2027 Term Loan | LIBOR | ||
Long-term debt | ||
Basis spread on variable rate | 1.75% | |
Finance leases and other obligations | ||
Long-term debt | ||
Long-term debt, gross | $ 308 | $ 319 |
Long-Term Debt - Debt Maturitie
Long-Term Debt - Debt Maturities (Details) $ in Millions | Jun. 30, 2022 USD ($) |
Debt Disclosure [Abstract] | |
2022 (remaining six months) | $ 17 |
2023 | 27 |
2024 | 32 |
2025 | 838 |
2026 | 811 |
2027 and thereafter | 8,709 |
Total long-term debt | $ 10,434 |
Long-Term Debt - Additional Inf
Long-Term Debt - Additional Information (Details) | 6 Months Ended |
Jun. 30, 2022 | |
Long-term debt | |
Redemption price, percentage | 101% |
Fair Value of Financial Instr_3
Fair Value of Financial Instruments (Details) - Fair Value, Measurements, Recurring - Significant Other Observable Inputs (Level 2) - USD ($) $ in Millions | Jun. 30, 2022 | Dec. 31, 2021 |
Carrying Amount | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Liabilities-Long-term debt, excluding finance leases | $ 10,103 | $ 10,103 |
Fair Value | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Liabilities-Long-term debt, excluding finance leases | $ 8,867 | $ 10,090 |
Commitments, Contingencies an_2
Commitments, Contingencies and Other Items (Details) | 6 Months Ended |
Jun. 30, 2022 USD ($) subsidiary patent | |
Loss Contingencies [Line Items] | |
Estimated litigation liability | $ 44,000,000 |
Number of patents allegedly infringed | patent | 1 |
Unfavorable Regulatory Action | |
Loss Contingencies [Line Items] | |
Estimate of possible loss | $ 300,000 |
Peruvian Tax Litigation, Before Interest | Pending Litigation | |
Loss Contingencies [Line Items] | |
Number of subsidiaries with tax assessment | subsidiary | 1 |
Asserted claim | $ 26,000,000 |
Brazilian Tax Claims | Maximum | |
Loss Contingencies [Line Items] | |
Estimate of possible loss | $ 51,000,000 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Balance at beginning of period | $ 13,009 | |
Other comprehensive loss, net of tax | (115) | $ (8) |
Net other comprehensive loss | (115) | (8) |
Balance at end of period | 12,552 | 13,170 |
Pension Plans | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Balance at beginning of period | 3 | (13) |
Other comprehensive loss, net of tax | 0 | 0 |
Net other comprehensive loss | 0 | 0 |
Balance at end of period | 3 | (13) |
Foreign Currency Translation Adjustment and Other | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Balance at beginning of period | (354) | (221) |
Other comprehensive loss, net of tax | (115) | (8) |
Net other comprehensive loss | (115) | (8) |
Balance at end of period | (469) | (229) |
Total | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Balance at beginning of period | (351) | (234) |
Balance at end of period | $ (466) | $ (242) |
Other Financial Information (De
Other Financial Information (Details) - USD ($) $ in Millions | Jun. 30, 2022 | Dec. 31, 2021 |
Prepaid Expense and Other Assets, Current [Abstract] | ||
Prepaid expenses | $ 132 | $ 109 |
Contract assets | 26 | 28 |
Other | 10 | 9 |
Total other current assets | 263 | 239 |
Other current assets reclassified as held for sale | 79 | 81 |
Fulfillment Costs (1) | ||
Prepaid Expense and Other Assets, Current [Abstract] | ||
Contract costs | 49 | 48 |
Acquisition Costs | ||
Prepaid Expense and Other Assets, Current [Abstract] | ||
Contract costs | $ 46 | $ 45 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) $ in Millions | 1 Months Ended | 6 Months Ended | ||||
Aug. 03, 2022 | Aug. 04, 2022 | Jun. 30, 2022 | Jun. 30, 2021 | Aug. 01, 2022 | Jul. 25, 2022 | |
Subsequent Event [Line Items] | ||||||
Payments of long-term debt | $ 64 | $ 925 | ||||
Subsequent Event | ||||||
Subsequent Event [Line Items] | ||||||
Payments of Distributions to Affiliates | $ 75 | |||||
Subsequent Event | Level 3 Parent, LLC | ||||||
Subsequent Event [Line Items] | ||||||
Debt Instrument, Repurchase Amount | $ 1,575 | |||||
Subsequent Event | Level 3 Financing, Inc. | Tranche B 2027 Term Loan | Term loan | ||||||
Subsequent Event [Line Items] | ||||||
Payments of long-term debt | $ 700 | |||||
Subsequent Event | Disposal Group, Held-for-sale, Not Discontinued Operations | Latin American Business | Level 3 Parent, LLC | ||||||
Subsequent Event [Line Items] | ||||||
Cash consideration for disposal of business | $ 2,700 |