Cover Page
Cover Page | 3 Months Ended |
Mar. 31, 2024 shares | |
Cover [Abstract] | |
Document Type | 10-Q |
Document Quarterly Report | true |
Document Period End Date | Mar. 31, 2024 |
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 | 931 14th Street, |
Entity Address, City or Town | Denver |
Entity Address, State or Province | CO |
Entity Address, Postal Zip Code | 80202-2994 |
City Area Code | 720 |
Local Phone Number | 888-1000 |
Entity Current Reporting Status | No |
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 | 2024 |
Document Fiscal Period Focus | Q1 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
OPERATING REVENUE | ||
Operating revenues | $ 1,590 | $ 1,784 |
OPERATING EXPENSES | ||
Cost of services and products (exclusive of depreciation and amortization) | 672 | 771 |
Selling, general and administrative | 337 | 286 |
Loss on sale of business | 22 | 77 |
Operating expenses - affiliates | 238 | 168 |
Depreciation and amortization | 364 | 347 |
Total operating expenses | 1,633 | 1,649 |
OPERATING (LOSS) INCOME | (43) | 135 |
OTHER (EXPENSE) INCOME | ||
Interest expense | (129) | (93) |
Net gain on early retirement of debt (Note 5) | 54 | 0 |
Other income, net | 14 | 5 |
Total other expense, net | (39) | (72) |
(LOSS) INCOME BEFORE INCOME TAXES | (82) | 63 |
Income tax (benefit) expense | (18) | 22 |
NET (LOSS) INCOME | (64) | 41 |
Affiliates | ||
OTHER (EXPENSE) INCOME | ||
Interest income - affiliate | 22 | 16 |
Non-Affiliate Revenue | ||
OPERATING REVENUE | ||
Operating revenues | 1,531 | 1,727 |
Affiliate Services | ||
OPERATING REVENUE | ||
Operating revenues | $ 59 | $ 57 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (UNAUDITED) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Statement of Comprehensive Income [Abstract] | ||
NET (LOSS) INCOME | $ (64) | $ 41 |
OTHER COMPREHENSIVE (LOSS) INCOME | ||
Foreign currency translation adjustments, net of $— and $(6) tax | (2) | 11 |
Other comprehensive (loss) income, net of tax | (2) | 11 |
COMPREHENSIVE (LOSS) INCOME | $ (66) | $ 52 |
CONSOLIDATED STATEMENTS OF CO_2
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (UNAUDITED) (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Statement of Comprehensive Income [Abstract] | ||
Foreign currency translation adjustments, tax | $ 0 | $ (6) |
CONSOLIDATED BALANCE SHEETS (UN
CONSOLIDATED BALANCE SHEETS (UNAUDITED) - USD ($) $ in Millions | Mar. 31, 2024 | Dec. 31, 2023 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 399 | $ 2,017 |
Other | 232 | 244 |
Total current assets | 3,958 | 4,272 |
Property, plant and equipment, net of accumulated depreciation of $3,779 and $3,665 | 7,413 | 7,398 |
OTHER ASSETS | ||
Customer relationships and other intangible assets, net | 4,067 | 4,237 |
Other, net | 1,289 | 1,346 |
Total other assets | 5,356 | 5,583 |
TOTAL ASSETS | 16,727 | 17,253 |
CURRENT LIABILITIES | ||
Current maturities of long-term debt | 32 | 31 |
Accrued expenses and other liabilities | ||
Salaries and benefits | 121 | 195 |
Income and other taxes | 113 | 105 |
Current operating lease liabilities | 295 | 288 |
Interest | 68 | 82 |
Other | 54 | 78 |
Current portion of deferred revenue | 312 | 300 |
Total current liabilities | 1,398 | 1,508 |
LONG-TERM DEBT | 10,155 | 8,952 |
DEFERRED REVENUE AND OTHER LIABILITIES | ||
Deferred revenue | 1,682 | 1,623 |
Operating lease liabilities | 806 | 845 |
Other | 682 | 709 |
Total deferred revenue and other liabilities | 3,170 | 3,177 |
COMMITMENTS AND CONTINGENCIES (Note 8) | ||
MEMBER'S EQUITY | ||
Member's equity | 2,034 | 3,644 |
Accumulated other comprehensive loss | (30) | (28) |
Total member's equity | 2,004 | 3,616 |
TOTAL LIABILITIES AND MEMBER'S EQUITY | 16,727 | 17,253 |
Nonrelated Party | ||
CURRENT ASSETS | ||
Accounts receivable, less allowance | 572 | 545 |
CURRENT LIABILITIES | ||
Accounts payable | 403 | 392 |
Affiliates | ||
CURRENT ASSETS | ||
Accounts receivable, less allowance | 87 | 0 |
Notes receivable - affiliate | 2,668 | 1,466 |
CURRENT LIABILITIES | ||
Accounts payable | 0 | 37 |
Accrued expenses and other liabilities | ||
Current operating lease liabilities | 136 | 129 |
DEFERRED REVENUE AND OTHER LIABILITIES | ||
Operating lease liabilities | $ 176 | $ 201 |
CONSOLIDATED BALANCE SHEETS (_2
CONSOLIDATED BALANCE SHEETS (UNAUDITED) - (Parenthetical) - USD ($) $ in Millions | Mar. 31, 2024 | Dec. 31, 2023 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 11 | $ 13 |
Accumulated depreciation | $ 3,779 | $ 3,665 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
OPERATING ACTIVITIES | ||
Net (loss) income | $ (64) | $ 41 |
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||
Depreciation and amortization | 364 | 347 |
Loss on sale of business | 22 | 77 |
Deferred income taxes | (19) | 19 |
Net gain on early retirement of debt | (54) | 0 |
Changes in current assets and liabilities: | ||
Accounts receivable | (26) | (15) |
Accounts payable | (20) | 27 |
Other assets and liabilities, net | (69) | (108) |
Other assets and liabilities, affiliate | (119) | 42 |
Changes in other noncurrent assets and liabilities, net | 238 | (30) |
Other, net | (35) | (21) |
Net cash provided by operating activities | 218 | 379 |
INVESTING ACTIVITIES | ||
Capital expenditures | (204) | (244) |
Proceeds from sale of property, plant and equipment and other assets | 9 | 23 |
Other, net | 0 | (4) |
Net cash used in investing activities | (1,397) | (225) |
FINANCING ACTIVITIES | ||
Net proceeds from issuance of long-term debt | 1,325 | 0 |
Distributions | (1,756) | (110) |
Contributions | 210 | 0 |
Payments of long-term debt | (8) | (8) |
Debt issuance and extinguishment costs and related fees | (210) | (11) |
Net cash used in financing activities | (439) | (129) |
Net (decrease) increase in cash, cash equivalents and restricted cash | (1,618) | 25 |
Cash, cash equivalents and restricted cash at beginning of period | 2,020 | 164 |
Cash, cash equivalents and restricted cash at end of period | 402 | 189 |
Supplemental cash flow information: | ||
Income taxes paid, net | (1) | (1) |
Interest paid (net of capitalized interest of $7 and $5) | (140) | (114) |
Supplemental non-cash information regarding financing activities: | ||
Issuance of senior secured notes as part of exchange offers (Note 5) | 0 | 915 |
Cash, cash equivalents and restricted cash: | ||
Cash and cash equivalents | 399 | 147 |
Cash and cash equivalents and restricted cash included in assets held for sale | 0 | 40 |
Restricted cash included in Other current assets | 1 | 0 |
Restricted cash included in Other, net noncurrent assets | 2 | 2 |
Total | 402 | 189 |
Related Party | ||
INVESTING ACTIVITIES | ||
Increase in notes receivable - affiliate | $ (1,202) | $ 0 |
CONSOLIDATED STATEMENTS OF CA_2
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Statement of Cash Flows [Abstract] | ||
Capitalized interest | $ 7 | $ 5 |
CONSOLIDATED STATEMENTS OF MEMB
CONSOLIDATED STATEMENTS OF MEMBER'S EQUITY (UNAUDITED) - USD ($) $ in Millions | Total | MEMBER'S EQUITY | ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME |
Balance at beginning of period at Dec. 31, 2022 | $ 7,119 | $ (344) | |
MEMBER'S EQUITY | |||
Net (loss) income | $ 41 | 41 | |
Distributions | (1,025) | ||
Contributions | 0 | ||
Other | 41 | ||
Other comprehensive (loss) income | 11 | 11 | |
Balance at end of period at Mar. 31, 2023 | 5,843 | 6,176 | (333) |
Balance at beginning of period at Dec. 31, 2023 | 3,616 | 3,644 | (28) |
MEMBER'S EQUITY | |||
Net (loss) income | (64) | (64) | |
Distributions | (1,800) | (1,756) | |
Contributions | 210 | 210 | |
Other | 0 | ||
Other comprehensive (loss) income | (2) | (2) | |
Balance at end of period at Mar. 31, 2024 | $ 2,004 | $ 2,034 | $ (30) |
Background
Background | 3 Months Ended |
Mar. 31, 2024 | |
Accounting Policies [Abstract] | |
Background | Background General We are a facilities-based technology and communications company that provides a broad array of integrated products and services to our domestic and global business customers. We operate one of the world’s most interconnected networks. Our platform empowers our customers to swiftly adjust digital programs to meet immediate demands, create efficiencies, accelerate market access and reduce costs, which allows our customers to rapidly evolve their IT programs to address dynamic changes. Our specific products and services are detailed in Note 3—Revenue Recognition. During 2022 and 2023, we divested components of our business, referenced herein as the Europe, Middle East and Africa ("EMEA") business, divested November 1, 2023 and the Latin American business, divested August 1, 2022. Please refer to Note 2—Divestitures of the Latin American and EMEA Businesses our Annual Report on Form 10-K for the year ended December 31, 2023 for more information on these divestitures. As we determined that neither of these divestitures represented a strategic shift for Level 3, they did not meet the criteria to be treated as discontinued operations and we continued to report our operating results for both of the divested businesses in our consolidated operating results through their respective disposal dates. Basis of Presentation Our consolidated balance sheet as of December 31, 2023, 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 three 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, 2023. 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 We reclassified certain prior period amounts to conform to the current period presentation, including our revenue by product and service categories. See Note 3—Revenue Recognition for additional information. These changes had no impact on total operating revenue, total operating expenses or net (loss) income for any period. During 2023, we identified errors in our previously reported consolidated financial statements related to accounts receivable and accounts payable. The errors are the result of understated revenues from one of our legacy mainframe billing systems and understated network expenses for periods prior to 2021. Notwithstanding this evaluation, we revised certain line items on our December 31, 2022 consolidated balance sheet in prior periods for these errors, which resulted in a decrease to our member's equity by $23 million, reflected in our January 1, 2023 and March 31, 2023 member's equity in our consolidated statements of member's equity herein. Please refer to 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, 2023 for more information. 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. Change in Accounting Estimate During the first quarter of 2024, we updated our analysis of economic lives of owned fiber network assets. As of January 1, 2024, we extended the estimated economic life and depreciation period of such assets from 25 years to 30 years to better reflect the physical life of the assets that we have experienced and absence of technological changes that would replace fiber. The change in accounting estimate decreased depreciation expense approximately $7 million, $5 million net of tax, from continuing operations for the quarter ended March 31, 2024. 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, 2023. Recently Adopted Accounting Pronouncements Supplier Finance Programs On January 1, 2023, we adopted Accounting Standards Update (“ASU”) 2022-04, “Liabilities-Supplier Finance Program (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations ” (“ASU 2022-04”). These amendments require that a company that uses a supplier finance program in connection with the purchase of goods or services disclose sufficient information about the program to allow a user of financial statements to understand the program’s nature, program activity during the period, changes from period to period and the potential magnitude of program transactions. The adoption of ASU 2022-04 did not have a material impact to our consolidated financial statements. Credit Losses On January 1, 2023, we adopted ASU 2022-02, “ Financial Instruments-Credit Losses (Topic 326): Troubled Debt Restructurings (“TDR”) and Vintage Disclosures ” (“ASU 2022-02”). The ASU eliminates the TDR recognition and measurement guidance, enhances existing disclosure requirements, and introduces new requirements related to certain modifications of receivables made to borrowers experiencing financial difficulty. The adoption of ASU 2022-02 did not have a material impact to our consolidated financial statements. Adoption of Other ASU With No Impact As of March 31, 2024, we adopted ASU 2023-01, “ Leases (Topic 842): Common Control Arrangements ”, and ASU 2022-03, “ Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions ”. The adoption of these ASU did not have any impact on our consolidated financial statements. Recently Issued Accounting Pronouncements In December 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-09 “ Income Taxes (Topic 740): Improvements to Income Tax Disclosures ” (“ASU 2023-09”). This ASU requires that public business entities must annually (i) disclose specific categories in the rate reconciliation and (ii) provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than 5 percent of the amount computed by multiplying pretax income or loss by the applicable statutory income tax rate).” ASU 2023-09 will become effective for us in fiscal year 2025 and early adoption is permitted. As of March 31, 2024, we had not early adopted this ASU and are currently evaluating its impact on our consolidated financial statements, including our annual disclosure within our Income Taxes note. In November 2023, the FASB issued ASU 2023-07, “ Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures ” (“ASU 2023-07”). This ASU is intended to improve reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. This ASU will become effective for us in annual period fiscal 2024 and early adoption is permitted. As of March 31, 2024, we do not expect ASU 2023-07 will have any impact to our consolidated financial statements. |
Goodwill, Customer Relationship
Goodwill, Customer Relationships and Other Intangible Assets | 3 Months Ended |
Mar. 31, 2024 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill, Customer Relationships and Other Intangible Assets | Goodwill, Customer Relationships and Other Intangible Assets Customer relationships and other intangible assets consisted of the following: March 31, 2024 December 31, 2023 (Dollars in millions) Customer relationships, less accumulated amortization of $4,047 and $3,896 $ 3,655 3,810 Capitalized software, less accumulated amortization of $431 and $419 412 427 Total customer relationships and other intangible assets, net $ 4,067 4,237 As of March 31, 2024, the gross carrying amount of customer relationships and capitalized software was $8.5 billion. Our goodwill was derived from Lumen's acquisition of us where the purchase price exceeded the fair value of the net assets acquired. We are required to assess our goodwill for impairment annually, or under certain circumstances, more frequently, such as when events or changes in circumstances indicate there may be impairment. We 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. During the second quarter of 2023, we fully impaired our remaining goodwill balance, recognizing a non-cash, non-tax-deductible goodwill impairment charge of $2.0 billion in that period. Total amortization expense for finite-lived intangible assets for the three months ended March 31, 2024 and 2023 totaled $186 million and $176 million, respectively. We estimate that total amortization expense for intangible assets for the years ending December 31, 2024 through 2028 will be as provided in the table below. (Dollars in millions) 2024 (remaining nine months) $ 519 2025 649 2026 636 2027 594 2028 557 |
Revenue Recognition
Revenue Recognition | 3 Months Ended |
Mar. 31, 2024 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition | Revenue Recognition We categorize our products and services revenue among the following categories: • Grow , which includes products and services that we anticipate will grow, including our colocation, dark fiber, Edge Cloud services, IP, managed security, Unified Communications and Collaboration ("UC&C"), wavelengths services and software-defined wide area networks ("SD WAN"); • Nurture , which includes our more mature offerings, including ethernet and VPN data network services; • Harvest , which includes our legacy services managed for cash flow, including Time Division Multiplexing ("TDM") voice, private line and other legacy services; • Other , which includes primarily managed and professional service solutions and content delivery network ("CDN") revenue, prior to the sale of substantially all of our CDN contracts in late 2023; and • Affiliate Services, which include communications services provided to our affiliates that we also provide to our external customers. From time to time, we may change the categorization of our products and services. Disaggregated Revenue by Service Offering The following table provides disaggregation of revenue from contracts with customers based on service offering for the three months ended March 31, 2024 and 2023. It also provides the amount of revenue that is not subject to ASC 606, but is instead governed by other accounting standards. The amounts in the tables below include the EMEA business revenue prior to it being sold on November 1, 2023. See Note 2—Divestitures of the Latin American and EMEA Businesses in our Annual Report on Form 10-K for the year ended December 31, 2023 for additional information on these divestitures. Three Months Ended March 31, 2024 Three Months Ended March 31, 2023 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) Grow $ 921 (125) 796 975 (162) 813 Nurture 385 (4) 381 438 (3) 435 Harvest 195 — 195 260 — 260 Other 30 — 30 54 — 54 Affiliate Services 59 (59) — 57 (57) — Total revenue $ 1,590 (188) 1,402 1,784 (222) 1,562 _____________________________________________________________________ (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 income are included in operating revenue in our consolidated statements of operations. For the three months ended March 31, 2024 and 2023, our gross rental income was $146 million and $181 million, which represents approximately 9% and 10% of our operating revenue, respectively. Customer Receivables and Contract Balances The following table provides balances of customer receivables, contract assets and contract liabilities as of March 31, 2024 and December 31, 2023: March 31, 2024 December 31, 2023 (Dollars in millions) Customer receivables (1) $ 570 544 Contract assets 8 8 Contract liabilities 237 222 _____________________________________________________________________ (1) Reflects gross customer receivables of $581 million and $557 million, net of allowance for credit losses of $11 million and $13 million, at March 31, 2024 and December 31, 2023, 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 March 31, 2024, we expect to recognize approximately $4.1 billion of revenue in the future related to performance obligations associated with existing customer contracts that are partially or wholly unsatisfied. As of March 31, 2024, the transaction price related to unsatisfied performance obligations that are expected to be recognized for the remainder of 2024, 2025 and thereafter was $1.5 billion, $1.4 billion and $1.2 billion, respectively. These amounts exclude (i) the value of unsatisfied performance obligations for contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed (for example, uncommitted usage or non-recurring charges associated with professional or technical services to be completed) and (ii) contracts that are classified as leasing arrangements that are not subject to ASC 606. Contract Costs The following table provides changes in our contract acquisition costs and fulfillment costs: Three Months Ended Three Months Ended Acquisition Costs Fulfillment Costs Acquisition Costs Fulfillment Costs (Dollars in millions) Beginning of period balance (1) $ 70 97 76 106 Costs incurred 12 17 17 23 Amortization (12) (15) (15) (16) Change in contract costs held for sale — — (4) (14) End of period balance (2) $ 70 99 74 99 ______________________________________________________________________ (1) Beginning of period balance for the three months ended March 31, 2023 excludes $6 million of acquisition costs and no fulfillment costs classified as held for sale related to the EMEA business. (2) End of period balance for the three months ended March 31, 2023 excludes $10 million of acquisition costs and $14 million fulfillment costs classified as held for sale related to the EMEA business. Acquisition costs include commission fees paid to employees as a result of obtaining contracts. Fulfillment costs include third party and internal costs associated with the provision, installation and activation of services to customers, including labor and materials consumed for these activities. We amortize deferred acquisition and fulfillment costs based on the transfer of services on a straight-line basis over the average expected contract life of approximately 36 months for our business customers. We include amortized fulfillment costs in cost of services and products and amortized acquisition costs in selling, general and administrative expenses in our consolidated statements of operations. We include the amount of these deferred costs that are anticipated to be amortized in the next twelve months in other current assets on our consolidated balance sheets. We include the amount of deferred costs expected to be amortized beyond the next twelve months in other non-current assets on our consolidated balance sheets. We assess deferred acquisition and fulfillment costs for impairment on a quarterly basis. |
Credit Losses on Financial Inst
Credit Losses on Financial Instruments | 3 Months Ended |
Mar. 31, 2024 | |
Credit Loss [Abstract] | |
Credit Losses on Financial Instruments | Credit Losses on Financial Instruments To assess our expected credit losses on financial instruments, we aggregate financial assets with similar risk characteristics to monitor their credit quality or deterioration over the life of such assets. We periodically monitor certain risk characteristics within our aggregated financial assets and revise their composition accordingly, to the extent internal and external risk factors change. We separately evaluate financial assets that do not share risk characteristics with other financial assets. Our financial assets measured at amortized cost primarily consist of accounts receivable. We use a loss rate method to estimate our allowance for credit losses. Our determination of the current expected credit loss rate begins with our review of historical loss experience as a percentage of accounts receivable. We measure our historical loss period based on the average days to recognize accounts receivable as credit losses. When asset specific characteristics and current conditions change from those in the historical period, due to changes in our credit and collections strategy, certain classes of aged balances, or credit loss and recovery policies, we perform a qualitative and quantitative assessment to adjust our historical loss rate. We use regression analysis to develop an expected loss rate using historical experience and economic data over a forecast period. We measure our forecast period based on the average days to collect payment on billed accounts receivable. To determine our current allowance for credit losses, we combine the historical and expected credit loss rates and apply them to our period end accounts receivable. If there is an unexpected deterioration of a customer's financial condition or an unexpected change in economic conditions, including macroeconomic events, we assess the need to adjust the allowance for credit losses. Any such resulting adjustments would affect earnings in the period that adjustments are made. The assessment of the correlation between historical observed default rates, current conditions and forecasted economic conditions requires judgment. Alternative interpretations of these factors could have resulted in different conclusions regarding our allowance for credit losses. The amount of credit loss is sensitive to changes in circumstances and forecasted economic conditions. Our historical credit loss experience, current conditions and forecast of economic conditions may also not be representative of the customers' actual default experience in the future and we may use methodologies that differ from those used by other companies. The following table presents the activity of our allowance for credit losses for our accounts receivable portfolio: (Dollars in millions) Beginning balance at December 31, 2023 $ 13 Provision for expected losses — Write-offs charged against the allowance (3) Recoveries collected 1 Ending balance at March 31, 2024 $ 11 |
Long-Term Debt
Long-Term Debt | 3 Months Ended |
Mar. 31, 2024 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | Long-Term Debt and Credit Facilities On March 22, 2024 (the "Effective Date"), Lumen Technologies, Inc ("Lumen"), Level 3 Financing, Inc. ("Level 3 Financing"), Qwest Corporation ("Qwest") and a group of creditors holding a majority of Lumen's consolidated debt (the "Consenting Debtholders" and, collectively with Lumen, Level 3 Financing and Qwest, the "TSA Parties") completed transactions contemplated under the amended and restated transaction support agreement ("TSA") that the TSA Parties entered into on January 22, 2024 (the "TSA Transactions"). Disclosures within this note will focus on the transactions impacting Level 3 Financing specifically. For detailed information about all transactions completed under the TSA, please see Note 5—Long-Term Debt and Credit Facilities in Item 1 of Part I of Lumen's Quarterly Report on Form 10-Q for the quarter ended March 31, 2024. The TSA Transactions, as they relate specifically to Level 3 Financing, include: • Lumen and certain of the Consenting Debtholders agreed to exchange a substantial portion of Lumen’s senior secured notes (the "Former Parent Secured Notes") for newly-issued Lumen superpriority secured notes, Level 3 Financing first lien notes and cash; • Level 3 Financing and certain of the Consenting Debtholders entered into a new credit agreement that established new term loan facilities (the “New Facilities”) in exchange for substantially all of the term loan debt due under Level 3 Financing's amended and restated credit agreement, dated as of November 29, 2019 (the “Former Facility”); • Level 3 Financing and certain of the Consenting Debtholders agreed to exchange a substantial portion of (i) certain Level 3 Financing senior secured notes (the "Former Secured Notes") for newly-issued Level 3 Financing first lien notes and (ii) each series of Level 3 Financing senior unsecured notes for newly-issued Level 3 Financing second lien notes; • Level 3 Financing privately placed $1.575 billion in aggregate principal amount of newly-issued first lien notes. maturing 2029, $1.325 billion of which was cash proceeds, $200 million of which was issued in exchange for a portion of the Former Parent Secured Notes and $50 million of which was comprised of non-cash lender fees; and • Level 3, Level 3 Financing and certain of their affiliates (the "Level 3 Collateral Guarantors") agreed to guarantee a portion of Lumen's obligations under each of its two new revolving credit facilities established as part of the TSA Transactions, as described further below. The following table reflects our consolidated long-term debt, including finance leases and other obligations, unamortized discounts and premiums, net and unamortized debt issuance costs, but excluding intercompany debt: Interest Rates (1) Maturities (1) March 31, 2024 December 31, 2023 (Dollars in millions) Level 3 Financing, Inc. Secured Senior Debt: (2) New Facilities: Term Loan B-1 (3) SOFR + 6.560% 2029 $ 1,199 — Term Loan B-2 (3) SOFR + 6.560% 2030 1,199 — Former Facility (4) SOFR + 1.75% 2027 12 2,411 First Lien Notes (5) 10.500% to 11.000% 2029 - 2030 3,846 925 Second Lien Notes 3.875% to 4.875% 2029 - 2031 2,229 — Former Senior Notes 3.400% - 3.875% 2027 - 2029 — 1,500 Unsecured Senior Notes: Senior notes (6) 3.400% - 4.625% 2027 - 2029 1,865 3,940 Finance leases and other obligations Various Various 252 259 Unamortized (discounts) premiums, net (258) 2 Unamortized debt issuance costs (157) (54) Total long-term debt 10,187 8,983 Less current maturities (32) (31) Long-term debt, excluding current maturities $ 10,155 8,952 ______________________________________________________________________ (1) As of March 31, 2024. All references to "SOFR" refer to the Secured Overnight Financing Rate. (2) As discussed further below in this Note, the debt listed under the caption “Senior Secured Debt” is either guaranteed by affiliates of the issuer, secured, or both. As discussed further in footnote 6, we reclassified in the "March 31, 2024" column of the table above certain notes that were secured prior to the Effective Date from “secured” to “unsecured” in light of amendments that released such prior security interests. (3) The Term Loan B-1 and B-2 each had an interest rate of 11.889% as of March 31, 2024. (4) Reflects Level 3 Tranche B 2027 Term Loan issued under the Former Facilities, which had an interest rate of 7.195% and 7.220% as of March 31, 2024 and December 31, 2023, respectively. (5) Includes Level 3 Financing's 10.500% Senior Secured Notes due 2030 issued in early 2023, the terms of which have been amended to be consistent with Level 3 Financing's first lien notes issued on March 22, 2024. (6) The total debt for these notes at March 31, 2024 includes the remaining aggregate principal amount due under the Former Secured Notes, the terms of which were amended on March 22, 2024 to release the guarantees of such debt and certain security interests relating thereto. Long-Term Debt Maturities Set forth below is the aggregate principal amount of our long-term debt as of March 31, 2024 (excluding unamortized (discounts) premiums, net, unamortized debt issuance costs, and intercompany debt), maturing during the following years: (Dollars in millions) 2024 (remaining nine months) $ 24 2025 37 2026 35 2027 507 2028 507 2029 and thereafter 9,492 Total long-term debt $ 10,602 Impact of Debt Transactions Consummation of the above-described TSA Transactions substantially changed the structure and terms of our consolidated long-term debt. The principal changes impacting the Level 3 Financing financial statements specifically included: • reducing the aggregate principal amount of our total consolidated debt maturities due on or before December 31, 2027 by approximately $3.7 billion (excluding finance leases and other obligations); • increasing the average weighted interest rate payable under our consolidated long-term debt from 5.55% to 8.42%; • increasing the portion of our consolidated long-term debt that is guaranteed, secured or both; • modifying the covenants applicable to our consolidated long-term debt; and • raising $1.325 billion of new cash through the issuance of Level 3 Financing first lien notes maturing 2029. Exchanges and Issuances The following table sets forth the aggregate principal amount of (i) former debt of Level 3 exchanged for new Level 3 debt and (ii) new debt issued by Level 3 in exchange for former Level 3 debt (except as otherwise noted), in each case during the three months ended March 31, 2024 in connection with the TSA Transaction: Former notes or facility exchanged New notes or facility issued Aggregate principal amount exchanged/issued (in millions) (1) Term Loan B Term Loan B-1, B-2 $ 2,398 3.400% Senior Notes due 2027 10.500% First Lien Notes due 2029 668 3.875% Senior Notes due 2029 10.750% First Lien Notes due 2029 678 4.625% Senior Notes due 2027 4.875% Second Lien Notes due 2029 606 4.250% Senior Notes due 2028 4.500% Second Lien Notes due 2030 712 3.625% Senior Notes due 2029 3.875% Second Lien Notes due 2030 458 3.750% Senior Notes due 2029 4.000% Second Lien Notes due 2031 453 n/a 11.000% First Lien Notes due 2029 (2) 1,575 Total $ 7,548 ______________________________________________________________________ (1) See our long-term debt table above for information on the amount of former debt that remains outstanding as of March 31, 2024. (2) Issued for cash and the other consideration described above. In evaluating the terms of the TSA transaction, we determined for certain of our creditors that the new debt instruments were substantially different than pre-existing debt and therefore constituted an extinguishment of old debt and establishment of new debt for which we recorded a gain on extinguishment in the first quarter of 2024. This new debt was recorded at fair value generating a reduction to debt of $261 million which was included in our aggregate net gain on extinguishment of $54 million, recognized in other income (expense), net in our consolidated statement of operations for the three months ended March 31, 2024. The remaining creditors’ debt was not substantially different under the terms of the TSA transaction and was treated under modification accounting rules. In conjunction with the TSA transaction, we paid $209 million in lender fees and $112 million in additional third-party costs. Of these amounts, $157 million lender fees were an offset to the gain on extinguishment and $61 million in third-party costs were recorded to selling, general and administrative expense in our consolidated statement of operations for the three months ended March 31, 2024. In accordance with US GAAP provisions for modification and extinguishment accounting, $52 million in lender fees and $51 million in third-party costs, respectively, were capitalized and will be amortized over the new terms of the arrangements. For information on various issuances, exchanges or payments of long-term indebtedness by Level 3 during 2023, see Note 7—Long-Term Debt in Item 8 of Part II of our Annual Report on Form 10-K for the year ended December 31, 2023. Level 3 Financing Credit Agreement On the Effective Date, Level 3 Financing, as borrower, Level 3 Financing Parent, the lenders party thereto and Wilmington Trust National Association, as administrative agent and collateral agent, entered into a Credit Agreement (the “New Level 3 Financing Credit Agreement”), providing for: • a secured term B-1 loan facility in the principal amount of approximately $1.2 billion maturing April 15, 2029 (the “TLB-1”); and • a secured term B-2 loan facility in the principal amount of approximately $1.2 billion maturing April 15, 2030 (the “TLB-2” and, together with the TLB-1, the “New Level 3 Financing Facilities”). Level 3 Financing’s obligations under the New Level 3 Financing Credit Agreement are secured by a first lien on substantially all of its assets (subject, in certain cases, to receipt of necessary regulatory approvals). In addition, the other Level 3 Collateral Guarantors have or, in certain cases after receiving necessary regulatory approvals, will provide an unconditional guarantee of payment of Level 3 Financing’s obligations under the New Level 3 Financing Credit Agreement secured by a lien on substantially all of their assets. Interest on borrowings under the New Level 3 Financing Credit Agreement is payable at the end of each interest period at a rate equal to, at Level 3 Financing’s option, term SOFR (subject to a 2.00% floor) plus 6.56% for term SOFR loans or a base rate plus 5.56% for base rate loans. Amounts outstanding under the New Level 3 Financing Credit Agreement may be prepaid at any time, subject to a premium of (i) 2.00% of the aggregate principal amount if prepaid on or prior to the 12-month anniversary of the Effective Date and (ii) 1.00% of the aggregate principal amount if prepaid after the 12-month anniversary of the Effective Date and on or prior to the 24-month anniversary of the Effective Date. The New Level 3 Financing Facilities require Level 3 Financing to make certain specified mandatory prepayments upon the occurrence of certain transactions. The New Level 3 Financing Credit Agreement contains certain customary events of default (subject, in certain cases, to customary grace and cure periods). If an event of default occurs, the lenders may, among other actions, accelerate the outstanding loans. In connection with entry into the New Level 3 Credit Agreement, the outstanding balance of the term B loans under the Former Facility was reduced to approximately $12 million. Level 3 Guarantees of Lumen Credit Agreements Lumen’s obligations under the Superpriority Revolving/Term A Credit Agreement dated as of March 22, 2024 (the “RCF/TLA Credit Agreement”) are unsecured, but the Level 3 Collateral Guarantors have provided or, in certain cases after receiving necessary regulatory approvals, will provide an unconditional guarantee of payment of up to $150 million of Lumen’s obligations under both of the revolving credit facilities created under the RCF/TLA Credit Agreement. Certain of such guarantees will be secured by a lien on substantially all of the assets of the applicable Level 3 Collateral Guarantors. The guarantee by the Level 3 Collateral Guarantors may be reduced or terminated under certain circumstances. Senior Notes General Terms of Senior Notes The Company’s consolidated indebtedness at March 31, 2024 included (i) first and second lien secured notes issued by Level 3 Financing and (ii) senior unsecured notes issued by Level 3 Financing. All of these notes carry fixed interest rates and all principal is due on the notes’ respective maturity dates, which rates and maturity dates are summarized in the table above. Level 3 Financing generally can redeem the notes, at its option, in whole or in part, (i) pursuant to a fixed schedule of pre-established redemption prices, (ii) pursuant to a “make whole” redemption price or (iii) under certain other specified limited conditions. Certain Guarantees and Security Interests Level 3 Financing’s obligations under its first lien notes are secured by a first lien on substantially all of its assets (subject, in certain cases, to receipt of necessary regulatory approvals), and are guaranteed by the other Level 3 Collateral Guarantors (or, for certain such guarantors, will be guaranteed upon the receipt of required regulatory approvals) on the same basis as the guarantees provided by such entities under the New Level 3 Financing Facilities. Level 3 Financing’s obligations under its second lien notes are secured by a second lien on substantially all of its assets (subject, in certain cases, to receipt of necessary regulatory approvals), and are guaranteed by the other Level 3 Collateral Guarantors (or, for certain such guarantors, will be guaranteed upon the receipt of required regulatory approvals) on the same basis as the guarantees provided by such entities under the New Level 3 Financing Facilities, except the lien securing such guarantees is a second lien. Pursuant to our purchase of network equipment under a supplier finance program implemented in 2021 with one of our key equipment vendors, we are obligated to make quarterly installment payments over a 5-year period and pay annual interest of 1.25% on unpaid balances. The first unsecured quarterly payment was due April 27, 2022, with remaining quarterly payments due through the end of the term on July 1, 2026. The supplier also agreed to certain milestone performance and other provisions that could result in us earning credits to be applied by us towards future equipment purchases. As of March 31, 2024 and December 31, 2023, we have received approximately $17 million and $15 million of credits and our outstanding obligations under the plan was $52 million and $55 million, respectively. As of March 31, 2024, $18 million was included in current maturities of long-term debt and $34 million was included in the long-term debt. Covenants The New Level 3 Financing Credit Agreement and Level 3 Financing’s first and second lien secured notes contain various representations and extensive affirmative and negative covenants. Such covenants include, among other things and subject to certain significant exceptions, restrictions on their ability to declare or pay dividends, repay certain other indebtedness, create liens, incur additional indebtedness, make investments, dispose of assets and merge or consolidate with any other person. Also, under certain circumstances in connection with a “change of control” of Level 3 Parent or Level 3 Financing, Level 3 Financing will be required to make an offer to repurchase each series of its outstanding senior notes at a price of 101% of the principal amount redeemed, plus accrued and unpaid interest. Compliance As of March 31, 2024, 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 | 3 Months Ended |
Mar. 31, 2024 | |
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, notes receivable-affiliate and long-term debt (excluding finance leases and other obligations) and certain indemnification obligations. Due to their short-term nature, the carrying amounts of our cash and cash equivalents, restricted cash, accounts receivable, notes 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 March 31, 2024 and December 31, 2023, as well as the input level used to determine the fair values indicated below: March 31, 2024 December 31, 2023 Input Level Carrying Amount Fair Value Carrying Amount Fair Value (Dollars in millions) Liabilities-Long-term debt, excluding finance leases 2 $ 9,935 8,683 8,724 6,418 Indemnifications related to the sale of the Latin American business (1) 3 86 86 86 86 _______________________________________________________________________________ (1) Nonrecurring fair value is measured as of August 1, 2022. |
Affiliate Transactions
Affiliate Transactions | 3 Months Ended |
Mar. 31, 2024 | |
Related Party Transactions [Abstract] | |
Affiliate Transactions | Affiliate Transactions We provide competitive local exchange carrier telecommunications services to our affiliates that we also provide to external customers. We believe these services are priced consistent with non-regulated rates charged to external customers. These services are billed directly to our affiliates and recognized as affiliate revenue on our consolidated statements of operations. Costs are incurred directly by our affiliates for the services they use whenever possible. When such costs are not directly incurred, they are allocated among all affiliates based upon the most reasonable method, first using cost causative measures, or, if no cost causative measure is available, using a general allocator. Unlike other affiliates of Lumen, we do not operate as a shared service company to our affiliates and therefore any allocated affiliate revenue we earn reduces the affiliate charges incurred by us and is presented on a net basis within Operating expenses – affiliates on our consolidated statements of operations. From time to time, we may adjust the basis for allocating the costs of a shared service among affiliates. Any such changes in allocation methodologies are generally applied prospectively. We also purchase services from our affiliates, including telecommunication services, insurance, flight services, and other support services such as legal, regulatory, finance, administration and executive support. Our affiliates charge us for those services using the allocation methodologies described above. On March 22, 2024, we entered into a $1.2 billion secured revolving credit facility with Lumen Technologies, Inc. with an 11% interest rate per annum. The principal amount is payable upon demand by us and prepayable by Lumen Technologies at any time, but no later than May 31, 2030, which maturity date may be extended for two additional one-year periods. The facility has covenants and is subject to other limitations, including a collateral agreement. On March 22, 2024, we amended and restated our unsecured credit facility with Lumen Technologies, Inc. under which we had $1.5 billion outstanding as of March 31, 2024, and December 31, 2023. As of March 31, 2024, the interest rate was 11.32% per annum and is subject to certain adjustments as set forth in the facility (SOFR + 6%). The principal amount is payable upon demand by us and prepayable by Lumen Technologies at any time, but no later than May 31, 2030, which maturity date may be extended for two additional one-year periods. The facility has covenants and is subject to other limitations. As of March 31, 2024, Lumen Technologies, Inc. owed us approximately $2.7 billion under the above-mentioned secured and unsecured revolving credit facilities with Lumen Technologies, Inc. During the three months ended March 31, 2024, we made a distribution of cash to Lumen Technologies, Inc. in the amount of approximately $1.8 billion, thereby reducing equity by the same amount, which was partially offset by a contribution from Lumen Technologies, Inc. for $210 million, thereby increasing equity by the same amount. |
Commitments, Contingencies and
Commitments, Contingencies and Other Items | 3 Months Ended |
Mar. 31, 2024 | |
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. We review our litigation accrual liabilities on a quarterly basis, but in accordance with applicable accounting guidelines only establish accrual liabilities when losses are deemed probable and reasonably estimable and only revise previously established accrual liabilities when warranted by changes in circumstances, in each case based on then-available information. As such, as of any given date we could have exposure to losses under proceedings as to which no liability has been accrued or as to which the accrued liability is inadequate. Subject to these limitations, at March 31, 2024, we had accrued $36 million in the aggregate for our litigation and non-income tax contingencies which is included in other current liabilities or other liabilities in our consolidated balance sheet as of such date. We cannot at this time estimate the reasonably possible loss or range of loss in excess of this $36 million accrual due to the inherent uncertainties and speculative nature of contested proceedings. The establishment of an accrual does not mean that actual funds have been set aside to satisfy a given contingency. Thus, the resolution of a particular contingency for the amount accrued could have no effect on our results of operations but nonetheless could have an adverse effect on our cash flows. Latin American Tax Litigation and Claims In connection with the 2022 divestiture of our Latin American business, the purchaser assumed responsibility for the Brazilian tax claims described in our prior periodic reports filed with the SEC. We agreed to indemnify the purchaser for amounts paid in respect to the Brazilian tax claims. The value of this indemnification and others associated with the Latin American business divestiture are included in the indemnification amount as disclosed in Note 6—Fair Value of Financial Instruments. Huawei Network Deployment Investigations Lumen has received requests from the following federal agencies for information relating to the use of equipment manufactured by Huawei Technologies Company ("Huawei") in Lumen’s networks. • DOJ. Lumen has received a civil investigative demand from the U.S. Department of Justice in the course of a False Claims Act investigation alleging that Lumen Technologies, Inc. and Lumen Technologies Government Solutions, Inc. failed to comply with certain specified requirements in federal contracts concerning their use of Huawei equipment. • FCC. The FCC’s Enforcement Bureau issued a Letter of Inquiry to Lumen Technologies, Inc. regarding its written certifications to the FCC that Lumen has complied with FCC rules governing the use of resources derived from the High Cost Program, Lifeline Program, Rural Health Care Program, E-Rate Program, Emergency Broadband Benefit Program, and the Affordable Connectivity Program. Under these programs, federal funds may not be used to facilitate the deployment or maintenance of equipment or services provided by Huawei, a company that the FCC has determined poses a national security threat to the integrity of U.S. communications networks or the communications supply chain. • Team Telecom. The Committee for the Assessment of Foreign Participation in the United States Telecommunications Service Sector (comprised of the U.S. Attorney General, and the Secretaries of the Department of Homeland Security, and the Department of Defense), commonly referred to as Team Telecom, issued questions and requests for information relating to Lumen’s FCC licenses and its use of Huawei equipment. We are cooperating with the investigations. Other Proceedings, Disputes and Contingencies From time to time, we are involved in other proceedings incidental to our business, including patent infringement allegations, regulatory hearings relating primarily to our rates or services, actions relating to employee claims, tax issues, or environmental law issues, grievance hearings before labor regulatory agencies 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. In addition, in the past we acquired companies that operated certain manufacturing companies in the first part of the 1900s. Under applicable environmental laws, we could be named as a potentially responsible party for a share of the remediation of environmental conditions arising from the historical operations of our predecessors. The 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, 2023. 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 | 3 Months Ended |
Mar. 31, 2024 | |
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 three months ended March 31, 2024: Pension Plans Foreign Currency Translation Adjustment and Other Total (Dollars in millions) Balance at December 31, 2023 $ (1) (27) (28) Other comprehensive loss, net of tax — (2) (2) Net other comprehensive loss — (2) (2) Balance at March 31, 2024 $ (1) (29) (30) The table below summarizes changes in accumulated other comprehensive loss recorded on our consolidated balance sheets by component for the three months ended March 31, 2023: Pension Plans Foreign Currency Translation Adjustment and Other Total (Dollars in millions) Balance at December 31, 2022 $ 21 (365) (344) Other comprehensive income, net of tax — 11 11 Net other comprehensive income — 11 11 Balance at March 31, 2023 $ 21 (354) (333) |
Other Financial Information
Other Financial Information | 3 Months Ended |
Mar. 31, 2024 | |
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 on our consolidated balance sheets: March 31, 2024 December 31, 2023 (Dollars in millions) Prepaid expenses $ 114 123 Contract fulfillment costs 49 50 Contract acquisition costs 40 40 Contract assets 6 6 Other 23 25 Total other current assets $ 232 244 |
Subsequent Event
Subsequent Event | 3 Months Ended |
Mar. 31, 2024 | |
Subsequent Events [Abstract] | |
Subsequent Event | Subsequent Event During April 2024 Lumen announced plans to reduce its workforce by less than 7% as a part of its efforts to change its workforce composition to reflect our ongoing transformation and cost reduction opportunities that align with its shapeshifting and focus on its strategic priorities. As a result of this plan, we expect to incur severance and related costs in the range of approximately $25 million to $35 million. This plan is expected to be substantially completed by the end of the second quarter of 2024. We do not expect to incur any material impairment or exit costs related to this plan. These workforce reductions are considered a subsequent event for the purposes of the March 31, 2024 financial statements, and therefore, we have not accrued any severance or related costs as of March 31, 2024. |
Background (Policies)
Background (Policies) | 3 Months Ended |
Mar. 31, 2024 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation Our consolidated balance sheet as of December 31, 2023, 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 three 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, 2023. 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 Supplier Finance Programs On January 1, 2023, we adopted Accounting Standards Update (“ASU”) 2022-04, “Liabilities-Supplier Finance Program (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations ” (“ASU 2022-04”). These amendments require that a company that uses a supplier finance program in connection with the purchase of goods or services disclose sufficient information about the program to allow a user of financial statements to understand the program’s nature, program activity during the period, changes from period to period and the potential magnitude of program transactions. The adoption of ASU 2022-04 did not have a material impact to our consolidated financial statements. Credit Losses On January 1, 2023, we adopted ASU 2022-02, “ Financial Instruments-Credit Losses (Topic 326): Troubled Debt Restructurings (“TDR”) and Vintage Disclosures ” (“ASU 2022-02”). The ASU eliminates the TDR recognition and measurement guidance, enhances existing disclosure requirements, and introduces new requirements related to certain modifications of receivables made to borrowers experiencing financial difficulty. The adoption of ASU 2022-02 did not have a material impact to our consolidated financial statements. Adoption of Other ASU With No Impact As of March 31, 2024, we adopted ASU 2023-01, “ Leases (Topic 842): Common Control Arrangements ”, and ASU 2022-03, “ Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions ”. The adoption of these ASU did not have any impact on our consolidated financial statements. Recently Issued Accounting Pronouncements In December 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-09 “ Income Taxes (Topic 740): Improvements to Income Tax Disclosures ” (“ASU 2023-09”). This ASU requires that public business entities must annually (i) disclose specific categories in the rate reconciliation and (ii) provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than 5 percent of the amount computed by multiplying pretax income or loss by the applicable statutory income tax rate).” ASU 2023-09 will become effective for us in fiscal year 2025 and early adoption is permitted. As of March 31, 2024, we had not early adopted this ASU and are currently evaluating its impact on our consolidated financial statements, including our annual disclosure within our Income Taxes note. In November 2023, the FASB issued ASU 2023-07, “ Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures ” (“ASU 2023-07”). This ASU is intended to improve reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. This ASU will become effective for us in annual period fiscal 2024 and early adoption is permitted. As of March 31, 2024, we do not expect ASU 2023-07 will have any impact to our consolidated financial statements. |
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 income are included in operating revenue in our consolidated statements of operations. |
Goodwill, Customer Relationsh_2
Goodwill, Customer Relationships and Other Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of goodwill, customer relationships and other intangible assets | Customer relationships and other intangible assets consisted of the following: March 31, 2024 December 31, 2023 (Dollars in millions) Customer relationships, less accumulated amortization of $4,047 and $3,896 $ 3,655 3,810 Capitalized software, less accumulated amortization of $431 and $419 412 427 Total customer relationships and other intangible assets, net $ 4,067 4,237 |
Schedule of estimated amortization expense for intangible assets | We estimate that total amortization expense for intangible assets for the years ending December 31, 2024 through 2028 will be as provided in the table below. (Dollars in millions) 2024 (remaining nine months) $ 519 2025 649 2026 636 2027 594 2028 557 |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
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 three months ended March 31, 2024 and 2023. It also provides the amount of revenue that is not subject to ASC 606, but is instead governed by other accounting standards. The amounts in the tables below include the EMEA business revenue prior to it being sold on November 1, 2023. See Note 2—Divestitures of the Latin American and EMEA Businesses in our Annual Report on Form 10-K for the year ended December 31, 2023 for additional information on these divestitures. Three Months Ended March 31, 2024 Three Months Ended March 31, 2023 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) Grow $ 921 (125) 796 975 (162) 813 Nurture 385 (4) 381 438 (3) 435 Harvest 195 — 195 260 — 260 Other 30 — 30 54 — 54 Affiliate Services 59 (59) — 57 (57) — Total revenue $ 1,590 (188) 1,402 1,784 (222) 1,562 _____________________________________________________________________ (1) Includes lease revenue which is not within the scope of ASC 606. |
Contract with customer, asset and liability | The following table provides balances of customer receivables, contract assets and contract liabilities as of March 31, 2024 and December 31, 2023: March 31, 2024 December 31, 2023 (Dollars in millions) Customer receivables (1) $ 570 544 Contract assets 8 8 Contract liabilities 237 222 _____________________________________________________________________ (1) |
Capitalized contract cost | The following table provides changes in our contract acquisition costs and fulfillment costs: Three Months Ended Three Months Ended Acquisition Costs Fulfillment Costs Acquisition Costs Fulfillment Costs (Dollars in millions) Beginning of period balance (1) $ 70 97 76 106 Costs incurred 12 17 17 23 Amortization (12) (15) (15) (16) Change in contract costs held for sale — — (4) (14) End of period balance (2) $ 70 99 74 99 ______________________________________________________________________ (1) Beginning of period balance for the three months ended March 31, 2023 excludes $6 million of acquisition costs and no fulfillment costs classified as held for sale related to the EMEA business. (2) End of period balance for the three months ended March 31, 2023 excludes $10 million of acquisition costs and $14 million fulfillment costs classified as held for sale related to the EMEA business. |
Credit Losses on Financial In_2
Credit Losses on Financial Instruments (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
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, 2023 $ 13 Provision for expected losses — Write-offs charged against the allowance (3) Recoveries collected 1 Ending balance at March 31, 2024 $ 11 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Debt Disclosure [Abstract] | |
Schedule of long-term debt | The following table reflects our consolidated long-term debt, including finance leases and other obligations, unamortized discounts and premiums, net and unamortized debt issuance costs, but excluding intercompany debt: Interest Rates (1) Maturities (1) March 31, 2024 December 31, 2023 (Dollars in millions) Level 3 Financing, Inc. Secured Senior Debt: (2) New Facilities: Term Loan B-1 (3) SOFR + 6.560% 2029 $ 1,199 — Term Loan B-2 (3) SOFR + 6.560% 2030 1,199 — Former Facility (4) SOFR + 1.75% 2027 12 2,411 First Lien Notes (5) 10.500% to 11.000% 2029 - 2030 3,846 925 Second Lien Notes 3.875% to 4.875% 2029 - 2031 2,229 — Former Senior Notes 3.400% - 3.875% 2027 - 2029 — 1,500 Unsecured Senior Notes: Senior notes (6) 3.400% - 4.625% 2027 - 2029 1,865 3,940 Finance leases and other obligations Various Various 252 259 Unamortized (discounts) premiums, net (258) 2 Unamortized debt issuance costs (157) (54) Total long-term debt 10,187 8,983 Less current maturities (32) (31) Long-term debt, excluding current maturities $ 10,155 8,952 ______________________________________________________________________ (1) As of March 31, 2024. All references to "SOFR" refer to the Secured Overnight Financing Rate. (2) As discussed further below in this Note, the debt listed under the caption “Senior Secured Debt” is either guaranteed by affiliates of the issuer, secured, or both. As discussed further in footnote 6, we reclassified in the "March 31, 2024" column of the table above certain notes that were secured prior to the Effective Date from “secured” to “unsecured” in light of amendments that released such prior security interests. (3) The Term Loan B-1 and B-2 each had an interest rate of 11.889% as of March 31, 2024. (4) Reflects Level 3 Tranche B 2027 Term Loan issued under the Former Facilities, which had an interest rate of 7.195% and 7.220% as of March 31, 2024 and December 31, 2023, respectively. (5) Includes Level 3 Financing's 10.500% Senior Secured Notes due 2030 issued in early 2023, the terms of which have been amended to be consistent with Level 3 Financing's first lien notes issued on March 22, 2024. (6) The total debt for these notes at March 31, 2024 includes the remaining aggregate principal amount due under the Former Secured Notes, the terms of which were amended on March 22, 2024 to release the guarantees of such debt and certain security interests relating thereto. |
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 March 31, 2024 (excluding unamortized (discounts) premiums, net, unamortized debt issuance costs, and intercompany debt), maturing during the following years: (Dollars in millions) 2024 (remaining nine months) $ 24 2025 37 2026 35 2027 507 2028 507 2029 and thereafter 9,492 Total long-term debt $ 10,602 |
Schedule of debt exchanges and issuances | The following table sets forth the aggregate principal amount of (i) former debt of Level 3 exchanged for new Level 3 debt and (ii) new debt issued by Level 3 in exchange for former Level 3 debt (except as otherwise noted), in each case during the three months ended March 31, 2024 in connection with the TSA Transaction: Former notes or facility exchanged New notes or facility issued Aggregate principal amount exchanged/issued (in millions) (1) Term Loan B Term Loan B-1, B-2 $ 2,398 3.400% Senior Notes due 2027 10.500% First Lien Notes due 2029 668 3.875% Senior Notes due 2029 10.750% First Lien Notes due 2029 678 4.625% Senior Notes due 2027 4.875% Second Lien Notes due 2029 606 4.250% Senior Notes due 2028 4.500% Second Lien Notes due 2030 712 3.625% Senior Notes due 2029 3.875% Second Lien Notes due 2030 458 3.750% Senior Notes due 2029 4.000% Second Lien Notes due 2031 453 n/a 11.000% First Lien Notes due 2029 (2) 1,575 Total $ 7,548 ______________________________________________________________________ (1) See our long-term debt table above for information on the amount of former debt that remains outstanding as of March 31, 2024. (2) Issued for cash and the other consideration described above. |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
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 March 31, 2024 and December 31, 2023, as well as the input level used to determine the fair values indicated below: March 31, 2024 December 31, 2023 Input Level Carrying Amount Fair Value Carrying Amount Fair Value (Dollars in millions) Liabilities-Long-term debt, excluding finance leases 2 $ 9,935 8,683 8,724 6,418 Indemnifications related to the sale of the Latin American business (1) 3 86 86 86 86 _______________________________________________________________________________ (1) Nonrecurring fair value is measured as of August 1, 2022. |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Loss (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
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 three months ended March 31, 2024: Pension Plans Foreign Currency Translation Adjustment and Other Total (Dollars in millions) Balance at December 31, 2023 $ (1) (27) (28) Other comprehensive loss, net of tax — (2) (2) Net other comprehensive loss — (2) (2) Balance at March 31, 2024 $ (1) (29) (30) The table below summarizes changes in accumulated other comprehensive loss recorded on our consolidated balance sheets by component for the three months ended March 31, 2023: Pension Plans Foreign Currency Translation Adjustment and Other Total (Dollars in millions) Balance at December 31, 2022 $ 21 (365) (344) Other comprehensive income, net of tax — 11 11 Net other comprehensive income — 11 11 Balance at March 31, 2023 $ 21 (354) (333) |
Other Financial Information (Ta
Other Financial Information (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
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 on our consolidated balance sheets: March 31, 2024 December 31, 2023 (Dollars in millions) Prepaid expenses $ 114 123 Contract fulfillment costs 49 50 Contract acquisition costs 40 40 Contract assets 6 6 Other 23 25 Total other current assets $ 232 244 |
Background - Basis of Presentat
Background - Basis of Presentation (Details) - USD ($) $ in Millions | Mar. 31, 2024 | Dec. 31, 2023 |
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 | $ 295 | $ 288 |
Operating lease liabilities | 806 | 845 |
Affiliates | ||
Lessee, Lease, Description [Line Items] | ||
Operating lease assets | 283 | 311 |
Current operating lease liabilities | 136 | 129 |
Operating lease liabilities | $ 176 | $ 201 |
Background - Segments (Details)
Background - Segments (Details) | 3 Months Ended |
Mar. 31, 2024 segment | |
Accounting Policies [Abstract] | |
Number of reportable segments | 1 |
Background - Change in Accounti
Background - Change in Accounting Estimates and Correction of Immaterial Errors (Details) - USD ($) $ in Millions | 3 Months Ended | |||
Mar. 31, 2024 | Jan. 01, 2024 | Dec. 31, 2023 | Jan. 01, 2023 | |
Change in Accounting Estimate [Line Items] | ||||
Member's equity | $ 2,034 | $ 3,644 | ||
Fiber Network Assets | ||||
Change in Accounting Estimate [Line Items] | ||||
Useful life | 30 years | 25 years | ||
Fiber Network Assets | Change in Accounting Method Accounted for as Change in Estimate | ||||
Change in Accounting Estimate [Line Items] | ||||
Depreciation | 7 | |||
Depreciation, net | $ 5 | |||
Correction of Error from Understatement of Revenues and Network Expenses Prior to 2021 | ||||
Change in Accounting Estimate [Line Items] | ||||
Member's equity | $ 23 |
Goodwill, Customer Relationsh_3
Goodwill, Customer Relationships and Other Intangible Assets - Schedule of Goodwill and Other Intangible Assets (Details) - USD ($) $ in Millions | Mar. 31, 2024 | Dec. 31, 2023 |
Finite-Lived Intangible Assets [Line Items] | ||
Customer relationships and other intangible assets, net | $ 4,067 | $ 4,237 |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Customer relationships and other intangible assets, net | 3,655 | 3,810 |
Accumulated amortization | 4,047 | 3,896 |
Capitalized software | ||
Finite-Lived Intangible Assets [Line Items] | ||
Customer relationships and other intangible assets, net | 412 | 427 |
Accumulated amortization | $ 431 | $ 419 |
Goodwill, Customer Relationsh_4
Goodwill, Customer Relationships and Other Intangible Assets - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2024 | Jun. 30, 2023 | Mar. 31, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |||
Intangible assets, gross, including goodwill | $ 8,500 | ||
Goodwill impairment charge | $ 2,000 | ||
Acquired finite-lived intangible asset amortization expense | $ 186 | $ 176 |
Goodwill, Customer Relationsh_5
Goodwill, Customer Relationships and Other Intangible Assets - Amortization Expense (Details) $ in Millions | Mar. 31, 2024 USD ($) |
Estimated amortization expense of finite-lived acquisition-related intangible assets | |
2024 (remaining nine months) | $ 519 |
2025 | 649 |
2026 | 636 |
2027 | 594 |
2028 | $ 557 |
Revenue Recognition - Disaggreg
Revenue Recognition - Disaggregation of Revenue (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Disaggregation of Revenue [Line Items] | ||
Total revenues | $ 1,590 | $ 1,784 |
Adjustments for non-ASC 606 revenue | (188) | (222) |
Total revenue from contracts with customers | 1,402 | 1,562 |
Grow | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues | 921 | 975 |
Adjustments for non-ASC 606 revenue | (125) | (162) |
Total revenue from contracts with customers | 796 | 813 |
Nurture | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues | 385 | 438 |
Adjustments for non-ASC 606 revenue | (4) | (3) |
Total revenue from contracts with customers | 381 | 435 |
Harvest | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues | 195 | 260 |
Adjustments for non-ASC 606 revenue | 0 | 0 |
Total revenue from contracts with customers | 195 | 260 |
Other | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues | 30 | 54 |
Adjustments for non-ASC 606 revenue | 0 | 0 |
Total revenue from contracts with customers | 30 | 54 |
Affiliate Services | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues | 59 | 57 |
Adjustments for non-ASC 606 revenue | (59) | (57) |
Total revenue from contracts with customers | $ 0 | $ 0 |
Revenue Recognition - Operating
Revenue Recognition - Operating Lease Income (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Revenue from Contract with Customer [Abstract] | ||
Rental income | $ 146 | $ 181 |
Percent of operating revenue | 9% | 10% |
Revenue Recognition - Customer
Revenue Recognition - Customer Receivables and Contract Balances (Details) - USD ($) $ in Millions | Mar. 31, 2024 | Dec. 31, 2023 | Jan. 01, 2023 | Jan. 01, 2022 |
Capitalized Contract Cost [Line Items] | ||||
Customer receivables | $ 570 | $ 544 | ||
Contract assets | 8 | 8 | ||
Contract liabilities | 237 | 222 | $ 222 | $ 281 |
Accounts receivable, gross | 581 | 557 | ||
Allowance for credit losses | $ 11 | $ 13 |
Revenue Recognition - Additiona
Revenue Recognition - Additional Information - Customer Receivables and Contract Balances (Details) - USD ($) $ in Millions | 3 Months Ended | ||||
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | Jan. 01, 2023 | Jan. 01, 2022 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |||||
Revenue recognized | $ 69 | $ 79 | |||
Contract liabilities | $ 237 | $ 222 | $ 222 | $ 281 | |
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 | Mar. 31, 2024 USD ($) |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation | $ 4.1 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-04-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Expected timing of satisfaction, period | 9 months |
Remaining performance obligation | $ 1.5 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Expected timing of satisfaction, period | 1 year |
Remaining performance obligation | $ 1.4 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2026-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Expected timing of satisfaction, period | 1 year |
Remaining performance obligation | $ 1.2 |
Revenue Recognition - Contract
Revenue Recognition - Contract Cost (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Contract acquisition costs | ||
Capitalized Contract Cost | ||
Beginning of period balance | $ 70,000,000 | $ 76,000,000 |
Costs incurred | 12,000,000 | 17,000,000 |
Amortization | (12,000,000) | (15,000,000) |
Change in contract costs held for sale | 0 | (4,000,000) |
End of period balance | 70,000,000 | 74,000,000 |
Contract acquisition costs | Disposal Group, Held-for-sale, Not Discontinued Operations | EMEA Business | ||
Capitalized Contract Cost | ||
Beginning of period balance | 6,000,000 | |
End of period balance | 10,000,000 | |
Contract fulfillment costs | ||
Capitalized Contract Cost | ||
Beginning of period balance | 97,000,000 | 106,000,000 |
Costs incurred | 17,000,000 | 23,000,000 |
Amortization | (15,000,000) | (16,000,000) |
Change in contract costs held for sale | 0 | (14,000,000) |
End of period balance | 99,000,000 | $ 99,000,000 |
Contract fulfillment costs | Disposal Group, Held-for-sale, Not Discontinued Operations | EMEA Business | ||
Capitalized Contract Cost | ||
Beginning of period balance | 0 | |
End of period balance | $ 14,000,000 |
Revenue Recognition - Additio_3
Revenue Recognition - Additional Information - Contract Costs (Details) | 3 Months Ended |
Mar. 31, 2024 | |
Business Customers | Weighted Average | |
Capitalized Contract Cost [Line Items] | |
Length of customer life | 36 months |
Credit Losses on Financial In_3
Credit Losses on Financial Instruments (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2024 USD ($) | |
Financing Receivable, Allowance for Credit Loss | |
Beginning balance at December 31, 2022 | $ 13 |
Provision for expected losses | 0 |
Write-offs charged against the allowance | (3) |
Recoveries collected | 1 |
Ending balance at March 31, 2024 | $ 11 |
Long-Term Debt - Schedule of Lo
Long-Term Debt - Schedule of Long Term Debt (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2024 | Dec. 31, 2023 | |
Long-term debt | ||
Unamortized (discounts) premiums, net | $ (258) | $ 2 |
Unamortized debt issuance costs | (157) | (54) |
Total long-term debt | 10,187 | 8,983 |
Less current maturities | (32) | (31) |
Long-term debt, excluding current maturities | $ 10,155 | $ 8,952 |
Long-term debt, weighted average interest rate | 8.42% | 5.55% |
SOFR | ||
Long-term debt | ||
Basis spread on variable rate (as a percent) | 6.56% | |
Term loan | Term Loan B-1 | ||
Long-term debt | ||
Long-term debt, gross | $ 1,199 | $ 0 |
Long-term debt, weighted average interest rate | 11.889% | |
Term loan | Term Loan B-1 | SOFR | ||
Long-term debt | ||
Basis spread on variable rate (as a percent) | 6.56% | |
Term loan | Term Loan B-2 | ||
Long-term debt | ||
Long-term debt, gross | $ 1,199 | 0 |
Long-term debt, weighted average interest rate | 11.889% | |
Term loan | Term Loan B-2 | SOFR | ||
Long-term debt | ||
Basis spread on variable rate (as a percent) | 6.56% | |
Term loan | Former Facility | ||
Long-term debt | ||
Long-term debt, gross | $ 12 | $ 2,411 |
Long-term debt, weighted average interest rate | 7.195% | 7.22% |
Term loan | Former Facility | SOFR | ||
Long-term debt | ||
Basis spread on variable rate (as a percent) | 1.75% | |
Senior notes | First Lien Notes | ||
Long-term debt | ||
Long-term debt, gross | $ 3,846 | $ 925 |
Senior notes | First Lien Notes | Minimum | ||
Long-term debt | ||
Stated interest rate | 10.50% | |
Senior notes | First Lien Notes | Maximum | ||
Long-term debt | ||
Stated interest rate | 11% | |
Senior notes | Second Lien Notes | ||
Long-term debt | ||
Long-term debt, gross | $ 2,229 | 0 |
Senior notes | Second Lien Notes | Minimum | ||
Long-term debt | ||
Stated interest rate | 3.875% | |
Senior notes | Second Lien Notes | Maximum | ||
Long-term debt | ||
Stated interest rate | 4.875% | |
Senior notes | Former Senior Notes | ||
Long-term debt | ||
Long-term debt, gross | $ 0 | 1,500 |
Senior notes | Former Senior Notes | Minimum | ||
Long-term debt | ||
Stated interest rate | 3.40% | |
Senior notes | Former Senior Notes | Maximum | ||
Long-term debt | ||
Stated interest rate | 3.875% | |
Senior notes | Senior Notes Maturing 2027-2029 | ||
Long-term debt | ||
Long-term debt, gross | $ 1,865 | $ 3,940 |
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 | 4.625% | |
Senior notes | 10.500% Senior Secured Notes Due 2030 | ||
Long-term debt | ||
Stated interest rate | 10.50% | |
Finance leases and other obligations | ||
Long-term debt | ||
Long-term debt, gross | $ 252 | $ 259 |
Long-Term Debt - Debt Maturitie
Long-Term Debt - Debt Maturities (Details) $ in Millions | Mar. 31, 2024 USD ($) |
Debt Disclosure [Abstract] | |
2024 (remaining nine months) | $ 24 |
2025 | 37 |
2026 | 35 |
2027 | 507 |
2028 | 507 |
2029 and thereafter | 9,492 |
Total long-term debt | $ 10,602 |
Long-Term Debt - Additional Inf
Long-Term Debt - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | |
Long-term debt | |||
Debt instrument, face amount | $ 7,548 | ||
Decrease in total consolidated debt | 3,700 | ||
Lender fees paid | 209 | ||
Third party costs paid | 112 | ||
Capitalized lender fees | 52 | ||
Capitalized third party costs | 51 | ||
Reduction in debt resulting from extinguishment of debt | 261 | ||
Gain on extinguishment of debt | $ 54 | $ 0 | |
Redemption price, percentage | 101% | ||
Prepaid on or prior to the 12-month anniversary of the effective date | |||
Long-term debt | |||
Prepayment premium, rate | 2% | ||
Prepaid after the 12-month anniversary and on or prior to the 24-month anniversary of the effective date | |||
Long-term debt | |||
Prepayment premium, rate | 1% | ||
Financial Guarantee | |||
Long-term debt | |||
Maximum guaranteed amount | $ 150 | ||
SOFR | |||
Long-term debt | |||
Interest rate floor | 2% | ||
Basis spread on variable rate (as a percent) | 6.56% | ||
Base Rate | |||
Long-term debt | |||
Basis spread on variable rate (as a percent) | 5.56% | ||
Gain (Loss) on Extinguishment of Debt | |||
Long-term debt | |||
Lender fees recognized as expense | $ 157 | ||
Operating Expense | |||
Long-term debt | |||
Third party costs expensed | 61 | ||
10.500% Senior Secured Notes Due 2030 | Senior notes | |||
Long-term debt | |||
Stated interest rate | 10.50% | ||
Former Facility | Term loan | |||
Long-term debt | |||
Amount outstanding | $ 12 | $ 2,411 | |
Former Facility | Term loan | SOFR | |||
Long-term debt | |||
Basis spread on variable rate (as a percent) | 1.75% | ||
Term Loan B-1 | Term loan | |||
Long-term debt | |||
Debt instrument, face amount | $ 1,200 | ||
Amount outstanding | $ 1,199 | 0 | |
Term Loan B-1 | Term loan | SOFR | |||
Long-term debt | |||
Basis spread on variable rate (as a percent) | 6.56% | ||
Term Loan B-2 | Term loan | |||
Long-term debt | |||
Debt instrument, face amount | $ 1,200 | ||
Amount outstanding | $ 1,199 | 0 | |
Term Loan B-2 | Term loan | SOFR | |||
Long-term debt | |||
Basis spread on variable rate (as a percent) | 6.56% | ||
First Lien Notes | Senior notes | |||
Long-term debt | |||
Amount outstanding | $ 3,846 | $ 925 | |
10.750% First Lien Notes Due 2029 | Senior notes | |||
Long-term debt | |||
Debt instrument, face amount | 678 | ||
Proceeds from issuance of debt | $ 1,325 | ||
Stated interest rate | 10.75% | ||
Noncash fee | $ 50 | ||
4.00% Senior Secured Notes | Senior notes | Lumen Technologies, Inc. | |||
Long-term debt | |||
Debt instrument, face amount | 200 | ||
11.000% First Lien Notes Due 2029 | Senior notes | |||
Long-term debt | |||
Debt instrument, face amount | $ 1,575 | ||
Stated interest rate | 11% |
Long-Term Debt - Exchanges and
Long-Term Debt - Exchanges and Issuances (Details) $ in Millions | Mar. 31, 2024 USD ($) |
Long-term debt | |
Aggregate principal amount | $ 7,548 |
Term loan | Term Loan B-1 And B-2 | |
Long-term debt | |
Aggregate principal amount | $ 2,398 |
Senior notes | 10.500% First Lien Notes Due 2029 | |
Long-term debt | |
Stated interest rate | 10.50% |
Aggregate principal amount | $ 668 |
Senior notes | 10.750% First Lien Notes Due 2029 | |
Long-term debt | |
Stated interest rate | 10.75% |
Aggregate principal amount | $ 678 |
Senior notes | 4.875% First Lien Notes Due 2029 | |
Long-term debt | |
Stated interest rate | 4.875% |
Aggregate principal amount | $ 606 |
Senior notes | 4.500% Second Lien Notes Due 2029 | |
Long-term debt | |
Stated interest rate | 4.50% |
Aggregate principal amount | $ 712 |
Senior notes | 3.875% Second Lien Notes Due 2030 | |
Long-term debt | |
Stated interest rate | 3.875% |
Aggregate principal amount | $ 458 |
Senior notes | 4.000% Second Lien Notes Due 2031 | |
Long-term debt | |
Stated interest rate | 4% |
Aggregate principal amount | $ 453 |
Senior notes | 11.000% First Lien Notes Due 2029 | |
Long-term debt | |
Stated interest rate | 11% |
Aggregate principal amount | $ 1,575 |
Senior notes | 3.400% Senior Notes Due 2027 | |
Long-term debt | |
Stated interest rate | 3.40% |
Senior notes | 3.875% Senior Notes Due 2029 | |
Long-term debt | |
Stated interest rate | 3.875% |
Senior notes | 4.625% Senior Notes Due 2027 | |
Long-term debt | |
Stated interest rate | 4.625% |
Senior notes | 4.250% Senior Notes Due 2028 | |
Long-term debt | |
Stated interest rate | 4.25% |
Senior notes | 3.625% Senior Notes Due 2029 | |
Long-term debt | |
Stated interest rate | 3.625% |
Senior notes | 3.750% Senior Notes Due 2029 | |
Long-term debt | |
Stated interest rate | 3.75% |
Long-Term Debt - Supplier Finan
Long-Term Debt - Supplier Finance Programs (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2024 | Dec. 31, 2023 | Mar. 31, 2023 | |
Long-term debt | |||
Supplier finance program, credit | $ 17,000,000 | $ 15,000,000 | |
Supplier Finance Programs | |||
Long-term debt | |||
Period to make quarterly installment payments | 5 years | ||
Stated interest rate | 1.25% | ||
Outstanding obligations under the plan | $ 52,000,000 | $ 55,000,000 | |
Obligation included in current maturities | $ 18,000,000 | $ 34,000,000 |
Fair Value of Financial Instr_3
Fair Value of Financial Instruments (Details) - USD ($) $ in Millions | Mar. 31, 2024 | Dec. 31, 2023 |
Level 3 | Carrying Amount | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Indemnifications related to the sale of the Latin American business | $ 86 | $ 86 |
Level 3 | Fair Value | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Indemnifications related to the sale of the Latin American business | 86 | 86 |
Fair Value, Measurements, Recurring | Level 2 | Carrying Amount | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Liabilities-Long-term debt, excluding finance leases | 9,935 | 8,724 |
Fair Value, Measurements, Recurring | Level 2 | Fair Value | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Liabilities-Long-term debt, excluding finance leases | $ 8,683 | $ 6,418 |
Affiliate Transactions (Details
Affiliate Transactions (Details) - USD ($) $ in Millions | 3 Months Ended | |||
Mar. 31, 2024 | Mar. 31, 2023 | Mar. 22, 2024 | Dec. 31, 2023 | |
Related Party Transaction [Line Items] | ||||
Distributions | $ (1,800) | |||
Contributions | 210 | |||
MEMBER'S EQUITY | ||||
Related Party Transaction [Line Items] | ||||
Distributions | (1,756) | $ (1,025) | ||
Contributions | $ 210 | $ 0 | ||
SOFR | ||||
Related Party Transaction [Line Items] | ||||
Basis spread on variable rate (as a percent) | 6.56% | |||
Affiliates | ||||
Related Party Transaction [Line Items] | ||||
Notes receivable - affiliate | $ 2,668 | $ 1,466 | ||
Affiliates | Lumen Technologies, Inc. | ||||
Related Party Transaction [Line Items] | ||||
Notes receivable - affiliate | $ 2,700 | |||
Affiliates | Lumen Technologies, Inc. | Revolving Credit Facility | ||||
Related Party Transaction [Line Items] | ||||
Principal amount | $ 1,200 | |||
Affiliates | Lumen Technologies, Inc. | Line of Credit | Revolving Credit Facility | ||||
Related Party Transaction [Line Items] | ||||
Stated interest rate | 11% | |||
Affiliates | Lumen Technologies, Inc. | Unsecured Debt | Unsecured Credit Facility | ||||
Related Party Transaction [Line Items] | ||||
Stated interest rate | 11.32% | |||
Amount outstanding | $ 1,500 | |||
Affiliates | Lumen Technologies, Inc. | Unsecured Debt | Unsecured Credit Facility | SOFR | ||||
Related Party Transaction [Line Items] | ||||
Basis spread on variable rate (as a percent) | 6% |
Commitments, Contingencies an_2
Commitments, Contingencies and Other Items (Details) | 3 Months Ended |
Mar. 31, 2024 USD ($) patent | |
Commitments and Contingencies Disclosure [Abstract] | |
Estimated litigation liability | $ 36,000,000 |
Number of patents allegedly infringed | patent | 1 |
Unfavorable Regulatory Action | |
Loss Contingencies [Line Items] | |
Estimate of possible loss (not expected to exceed) | $ 300,000 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
AOCI Attributable to Parent, Net of Tax | ||
Balance at beginning of period | $ 3,616 | |
Other comprehensive loss, net of tax | (2) | $ 11 |
Net other comprehensive loss | (2) | 11 |
Balance at end of period | 2,004 | 5,843 |
Pension Plans | Pension Plans | ||
AOCI Attributable to Parent, Net of Tax | ||
Balance at beginning of period | (1) | 21 |
Other comprehensive loss, net of tax | 0 | 0 |
Net other comprehensive loss | 0 | 0 |
Balance at end of period | (1) | 21 |
Foreign Currency Translation Adjustment and Other | ||
AOCI Attributable to Parent, Net of Tax | ||
Balance at beginning of period | (27) | (365) |
Other comprehensive loss, net of tax | (2) | 11 |
Net other comprehensive loss | (2) | 11 |
Balance at end of period | (29) | (354) |
Total | ||
AOCI Attributable to Parent, Net of Tax | ||
Balance at beginning of period | (28) | (344) |
Balance at end of period | $ (30) | $ (333) |
Other Financial Information (De
Other Financial Information (Details) - USD ($) $ in Millions | Mar. 31, 2024 | Dec. 31, 2023 |
Prepaid Expense and Other Assets, Current [Abstract] | ||
Prepaid expenses | $ 114 | $ 123 |
Contract assets | 6 | 6 |
Other | 23 | 25 |
Total other current assets | 232 | 244 |
Contract fulfillment costs | ||
Prepaid Expense and Other Assets, Current [Abstract] | ||
Contract costs | 49 | 50 |
Contract acquisition costs | ||
Prepaid Expense and Other Assets, Current [Abstract] | ||
Contract costs | $ 40 | $ 40 |
Subsequent Event (Details)
Subsequent Event (Details) - Severance - Workforce Reduction - USD ($) | 1 Months Ended | |
Apr. 30, 2024 | Mar. 31, 2024 | |
Subsequent Event [Line Items] | ||
Accrual for severance and related costs | $ 0 | |
Subsequent Event | ||
Subsequent Event [Line Items] | ||
Percentage of workforce to be eliminated | 7% | |
Subsequent Event | Minimum | ||
Subsequent Event [Line Items] | ||
Expected cost | $ 25,000,000 | |
Subsequent Event | Maximum | ||
Subsequent Event [Line Items] | ||
Expected cost | $ 35,000,000 |