UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September~~March 3031, ~~2024~~2025


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to

Commission File No. 001-03040

QWEST CORPORATION

(Exact name of registrant as specified in its charter)

Colorado

84-0273800

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification No.)

931 14th Street,

Denver,

Colorado

80202

(Address of principal executive offices)

(Zip Code)

(318) 388-9000

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol(s)

Name of Each Exchange on Which Registered

6.5% Notes Due 2056

CTBB

New York Stock Exchange

6.75% Notes Due 2057

CTDD

New York Stock Exchange

THE REGISTRANT, A WHOLLY OWNED INDIRECT SUBSIDIARY OF LUMEN TECHNOLOGIES, INC. MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTIONS H(1) (a) AND (b) OF FORM 10-Q AND IS THEREFORE FILING THIS FORM WITH REDUCED DISCLOSURE FORMAT PURSUANT TO GENERAL INSTRUCTION H(2).

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer", "smaller reporting company," and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

All of the capital stock of the registrant is held by an affiliate of the registrant. None of the capital stock is publicly held.

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TABLE OF CONTENTS

	Special Note Regarding Forward-Looking Statements	3
Part I.	Financial Information
	Part I - Financial Information
Item 1.	Financial Statements
	Consolidated Statements of Operations (Unaudited)	6
	Consolidated Balance Sheets (Unaudited)	7
	Consolidated Statements of Cash Flows (Unaudited)	8
	Consolidated Statements of Stockholder's Equity (Unaudited)	9
	Notes to Consolidated Financial Statements (Unaudited)*	10
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	2521
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	36
	Overview	21
Item 4.	Controls and Procedures	36
	Results of Operations	23
Part II.	Other Information
	Liquidity and Capital Resources	26
Item 1.	Legal Proceedings	37
	Other Information	30
Item 1A.	Risk Factors	37
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	31
Item 6.	Exhibits	38
Item 4.	Controls and Procedures	31
Signature		39
	Part II - Other Information
* All references to "Notes" in this quarterly report refer to these Notes to Consolidated Financial Statements, unless otherwise specified.
Item 1.	Legal Proceedings	32
Item 1A.	Risk Factors	32
Item 6.	Exhibits	33
Signature		34
* All references to "Notes" in this quarterly report refer to these Notes to Consolidated Financial Statements.

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Special Note Regarding Forward-Looking Statements

This report and other documents filed by us under the federal securities law include, and future oral or written statements or press releases by us and our management may include, forward-looking statements about our business, financial condition, operating results, or prospects. These "forward-looking" statements are defined by, and are subject to the "safe harbor" protections under, the federal securities laws. These statements include, among others:

•forecasts of our anticipated future results of operations, cash flows, or financial position;

•statements concerning our completed, pending, or proposed transactions, investments, product development, transformation plans, participation in government programs, Quantum Fiber ~~initiatives~~buildout, use of artificial intelligence ("AI"), deleveraging plans, and other initiatives, including benefits or costs associated therewith;

•statements about our liquidity, profitability, profit margins, tax position, tax assets, tax rates, asset values, contingent liabilities, growth opportunities, growth rates, acquisition and divestiture opportunities, business prospects, regulatory and competitive outlook, market share, product capabilities, investment and expenditure plans, business strategies, debt leverage, capital allocation plans, financing or refinancing alternatives and sources, and pricing plans; and

•other similar statements of our expectations, beliefs, future plans and strategies, anticipated developments, and other matters that are not historical facts, many of which are highlighted by words such as “may,” “will,” “would,” “could,” “should,” “plans,” “believes,” “expects,” “anticipates,” “estimates,” "forecasts," “projects,” "proposes," "targets," “intends,” “likely,” “seeks,” “hopes,” or variations or similar expressions with respect to the future.

These forward-looking statements are based upon our judgment and assumptions as of the date such statements are made concerning future developments and events, many of which are beyond our control. These forward-looking statements, and the assumptions upon which they are based, (i) are not guarantees of future results, (ii) are inherently speculative, and (iii) are subject to a number of risks and uncertainties. Actual events and results may differ materially from those anticipated, estimated, projected, or implied by us in those statements if one or more of these risks or uncertainties materialize, or if our underlying assumptions prove incorrect. All of our forward-looking statements are qualified in their entirety by reference below to factors that could cause our actual results to differ materially from those anticipated, estimated, projected or implied by us in those forward- looking statements. These factors include but are not limited to:

•the effects of intense competition from a wide variety of competitive providers, including decreased demand for our more mature service offerings and increased pricing pressures;

•the effects of new, emerging, or competing technologies, including those that could make our products less desirable or obsolete;

•our ability to successfully and timely attain our key operating imperatives, including simplifying and consolidating our network, simplifying and automating our service support systems, attaining our Quantum Fiber buildout schedule, replacing aging or obsolete plant and equipment, strengthening our relationships with customers, and attaining projected cost savings;

•our ability to safeguard our network, and to avoid the adverse impact of cyber-attacks, security breaches, service outages, system failures, or similar events impacting our network or the availability and quality of our services;

•the effects of ongoing changes in the regulation of the communications industry, including the outcome of legislative, regulatory, or judicial proceedings relating to content liability standards, intercarrier compensation, universal service, service standards, broadband deployment, data protection, privacy and net neutrality;

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•our ability to generate cash flows sufficient to fund our financial commitments and objectives, including our capital expenditures, operating costs, ~~taxes,~~ debt obligations, taxes, and pension contributions and other benefits payments;

•our ability to effectively retain and hire key personnel and to successfully negotiate collective bargaining agreements on reasonable terms without work stoppages;

•our ability to successfully adjust to changes in customer demand for our products and services, including increased demand for high-speed data transmission services and ~~artificial~~AI-enhanced ~~intelligence~~ services;

•our ability to ~~successfully~~enhance ~~maintain~~our ~~the~~growth ~~quality~~products and ~~profitability~~manage the decline of our ~~existing~~legacy ~~product~~products, including by maintaining the quality and ~~service~~profitability of our existing offerings, tointroducing ~~introduce~~ profitable new offerings on a timely and cost-effective basis and totransitioning ~~transition~~ customers from our legacy products to our newer offerings;

•our ability to successfully and timely implement our corporate strategies, including our transformation, buildout, and deleveraging strategies;

•changes in our operating plans, corporate strategies or capital allocation plans, whether based upon, changes in our cash flows, cash requirements, financial performance, financial position, market or regulatory conditions, or otherwise;

•the negative impact of increases in the costs of Lumen’s pension, healthcare, post-employment, or other benefits, including those caused by changes in capital markets, interest rates, mortality rates, demographics, or regulations;

•the impact of events that harm our reputation or brands, including potential negative impact of customer complaints, government investigations, security breaches, or service outages impacting us or our industry;

•adverse changes in our access to credit markets on acceptable terms, whether caused by changes in our financial position, lower credit ratings, unstable markets, debt covenant restrictions, or otherwise;

•the ability of us and our affiliates to meet the terms and conditions of our respective debt obligations and covenants, including our ability to make transfers of cash in compliance therewith;

•~~the~~our ability ofto usmaintain ~~and~~favorable ~~our~~relations ~~affiliates~~with toour ~~attain~~security ~~the~~holders, ~~anticipated~~key ~~benefits~~business ofpartners, ~~the~~suppliers, ~~March~~vendors, 22landlords, ~~2024~~or ~~debt transactions:~~lenders;

•our ability to maintain favorable relations with our security holders, key business partners, suppliers, vendors, landlords and lenders;

•our ability to timely obtain necessary hardware, software, equipment, services, governmental permits and other items on favorable terms;

•Lumen's ability to meet evolving environmental, social and governance ("ESG") expectations and benchmarks, and effectively communicate and implement its ESG strategies;

•the potential adverse effects arising out of allegations regarding the release of hazardous materials into the environment from network assets owned or operated by us or our predecessors, including any resulting governmental actions, removal costs, litigation, compliance costs, or penalties;

•our ability to collect our receivables from, or continue to do business with, financially troubled customers;

•our ability to continue to use intellectual property used to conduct our operations;

•any adverse developments in legal or regulatory proceedings involving us or our affiliates, including Lumen Technologies;

•changes in tax, trade, tariff, pension, healthcare or other laws or regulations, in governmental support programs, or in general government funding levels, including those arising from governmental programs promoting broadband development;

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•~~changes~~the ineffects ~~tax,~~of ~~trade,~~changes ~~pension,~~in ~~healthcare~~accounting ~~or other laws or regulations~~policies, ~~in governmental support programs~~practices, or ~~in general government funding levels~~assumptions, including ~~those~~changes ~~arising~~that ~~from~~could ~~governmental~~potentially ~~programs~~require ~~promoting~~additional ~~broadband~~future ~~development~~impairment charges;

•the effects of ~~changes~~adverse inweather, ~~accounting~~terrorism, ~~policies~~epidemics, ~~practices~~pandemics, orwar, ~~assumptions~~rioting, ~~including~~vandalism, ~~changes~~societal ~~that~~unrest, ~~could~~political ~~potentially~~discord, ~~require~~or ~~additional~~other ~~future~~natural ~~impairment~~or ~~charges~~man-made disasters or disturbances;

•the effects of adverse weather, terrorism, epidemics, pandemics, rioting, vandalism, societal unrest, political discord, or other natural or man-made disasters or disturbances;

•the potential adverse effects if our internal controls over financial reporting have weaknesses or deficiencies, or otherwise fail to operate as intended;

•the effects of changes in interest rates or inflation;

•the effects of more general factors such as changes in exchange rates, in operating costs, in public policy, in the views of financial analysts, or in general market, labor, economic, public health, or geopolitical conditions; and

•other risks referenced in the "Risk Factors" section or other portions of this report or other of our filings with the U.S. Securities and Exchange Commission (the "SEC").

Additional factors or risks that we currently deem immaterial, that are not presently known to us, or that arise in the future could also cause our actual results to differ materially from our expected results. Given these uncertainties, investors are cautioned not to unduly rely upon our forward-looking statements, which speak only as of the date made. We undertake no obligation to publicly update or revise any forward-looking statements for any reason, whether as a result of new information, future events or developments, changed circumstances, or otherwise. Furthermore, any information about our intentions contained in any of our forward-looking statements reflects our intentions as of the date of such forward-looking statement, and is based upon, among other things, our assessment of regulatory, technological, industry, competitive, economic, and market conditions as of such date. We may change our intentions, strategies or plans (including our capital allocation plans) at any time and without notice, based upon any changes in such factors or otherwise.

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PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

QWEST CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

2024

2023

2024

2023

2025

2024

~~(Dollars in millions)~~

(Dollars in millions)

OPERATING REVENUE

Operating revenue

~~793~~

~~924~~

~~2,468~~$

740

~~2,869~~846

Operating revenue—affiliates

~~570~~

~~526~~

~~1,676~~482

~~1,589~~546

Total operating revenue

~~1,363~~

~~1,450~~

41,~~144~~222

41,~~458~~392

OPERATING EXPENSES

Cost of services and products (exclusive of depreciation and amortization)

~~389~~

~~416~~

~~1,132~~354

~~1,207~~370

Selling, general and administrative

~~111~~

~~118~~

~~357~~104

~~362~~128

Operating expenses—affiliates

~~182~~

~~225~~

~~575~~185

~~600~~212

Depreciation and amortization

~~183~~

~~207~~

~~557~~191

~~607~~187

Total operating expenses

~~865~~

~~966~~

~~2,621~~834

~~2,776~~897

OPERATING INCOME

~~498~~

~~484~~

~~1,523~~388

~~1,682~~495

OTHER (EXPENSE) INCOME

Interest expense, net

(11)

(23)

(44)

(75)

Interest expense

(22)

(19)

Interest income—affiliate, net

1413

Other income, net

Total other expense, net

~~(1)~~

~~(17)~~

(295)

(6316)

INCOME BEFORE INCOME TAX EXPENSE

~~497~~

~~467~~

~~1,494~~383

~~1,619~~479

Income tax expense

~~132~~

~~126~~

~~398~~99

~~426~~126

NET INCOME

~~365~~

~~341~~

~~1,096~~$

284

~~1,193~~353

See accompanying notes to consolidated financial statements.

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QWEST CORPORATION

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

	September 30, 2024		December 31, 2023
	March 31, 2025		December 31, 2024
	(Dollars in millions)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	2240	1026
Accounts receivable, less allowance of $31 and $34	217		261
Accounts receivable, less allowance of $29 and $29	224		227
Advances to affiliates	~~576~~244		—902
Other	133		144
Note receivable - affiliates	900		—
Total current assets	948		415
Other current assets, net	131		152
Property, plant and equipment, net of accumulated depreciation of $8,748 and $8,239	8,829		8,700
Total current assets	1,539		1,307
Property, plant and equipment, net of accumulated depreciation of $9,069 and $8,910	8,830		8,865
GOODWILL AND OTHER ASSETS
Goodwill	6,955		6,955
Other intangible assets, net	92		103
Intangible assets, net	95		84
Other, net	164		164
Other assets, net	152		151
Total goodwill and other assets	7,~~211~~202		7,~~222~~190
TOTAL ASSETS	$	1617,~~988~~571	1617,~~337~~362
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt	$	~~241~~239	1239
Accounts payable	~~239~~138		~~362~~221
Advances from affiliates	—		61
Accrued expenses and other liabilities
Salaries and benefits	~~131~~110		130
Income and other taxes	~~108~~128		96106
Other	121		121
Other current liabilities	113		117
Current portion of deferred revenue	~~147~~154		~~162~~153
Total current liabilities	~~987~~882		~~933~~966
LONG-TERM DEBT	1,~~689~~688		21,~~156~~688
DEFERRED CREDITS AND OTHER LIABILITIES
Deferred income taxes, net	1,~~295~~344		1,~~318~~336
Affiliate obligations, net	~~454~~432		~~495~~444
Other	711		679
Other liabilities	698		685
Total deferred credits and other liabilities	2,~~460~~474		2,~~492~~465
COMMITMENTS AND CONTINGENCIES (Note 9)
COMMITMENTS AND CONTINGENCIES (Note 7)
STOCKHOLDER'S EQUITY
Common stock - one share without par value, owned by Qwest Services Corporation	10,050		10,050
Retained earnings	12,~~802~~477		~~706~~2,193
Total stockholder's equity	1112,~~852~~527		1012,~~756~~243
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY	$	1617,~~988~~571	1617,~~337~~362

See accompanying notes to consolidated financial statements.

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QWEST CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Nine Months Ended September 30,
	Three Months Ended March 31,
	2024		2023
	2025		2024
	(Dollars in millions)
OPERATING ACTIVITIES
Net income	$	~~1,096~~284	~~1,193~~353
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	~~557~~191		~~607~~187
Deferred income taxes	~~(23)~~8		(218)
Provision for uncollectible accounts	3510		5120
Changes in current assets and liabilities:
Accounts receivable	9(7)		(930)
Accounts payable	(1661)		11(23)
Accrued income and other taxes	1222		2223
Other current assets and liabilities, net	(64)		(2339)
Changes in other noncurrent assets and liabilities, net	30		33
Changes in other assets and liabilities, net	12		7
Changes in affiliate obligations, net	(4112)		(4614)
Other, net	~~(7)~~10		4(5)
Net cash provided by operating activities	~~1,646~~453		~~1,822~~471
INVESTING ACTIVITIES
Capital expenditures	(~~776~~203)		(~~773~~277)
Changes in advances to affiliates	~~(576)~~658		~~(1,057)~~—
Proceeds from sale of property, plant and equipment and other assets	6		10
Net increase in note receivable - affiliates	(900)		—
Net cash used in investing activities	(1,346)		(1,820)
Proceeds from sale of property, plant and equipment and other assets	6		3
Net cash used in investing activities	(439)		(274)
FINANCING ACTIVITIES
Payments of long-term debt	(227)		(2)
Changes in advances from affiliates	—		(193)
Changes in advances from affiliates	(61)		—
Net cash used in financing activities	—		(193)
Net cash used in financing activities	(288)		(2)
Net increase in cash, cash equivalents and restricted cash	14		4
Net increase in cash, cash equivalents and restricted cash	12		—
Cash, cash equivalents and restricted cash at beginning of period	28		12
Cash, cash equivalents and restricted cash at beginning of period	12		10
Cash, cash equivalents and restricted cash at end of period	$	42	16
Cash, cash equivalents and restricted cash at end of period	$	24	10
Supplemental cash flow information:
Income taxes paid, net	$	(~~393~~84)	(~~423~~126)
Interest paid, including affiliate interest (net of capitalized interest of $60 and $37)	$	(47)	(79)
Interest paid, including affiliate interest (net of capitalized interest of $10 and $19)	(25)		(21)
Supplemental noncash information regarding financing activities:
Repayment of long-term debt in exchange for advances from affiliates	$	215	—
Repayment of long-term debt in exchange for reductions of advances from affiliates	$	—	215
Cash, cash equivalents and restricted cash:
Cash and cash equivalents	$	2240	814
Restricted cash - noncurrent	2		2
Restricted cash included in Other assets, net	2		2
Total	$	2442	1016

See accompanying notes to consolidated financial statements.

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QWEST CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY

(UNAUDITED)

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

2024

2023

2024

2023

2025

2024

~~(Dollars in millions)~~

(Dollars in millions)

COMMON STOCK

Balance at beginning of period

~~10,050~~

~~10,050~~$

10,050

Balance at end of period

~~10,050~~

10,050

RETAINED EARNINGS

Balance at beginning of period

~~1,437~~

~~4,369~~

~~706~~2,193

~~3,517~~706

Net income

~~365~~

~~341~~

~~1,096~~284

~~1,193~~353

Balance at end of period

~~1,802~~

~~4,710~~

12,~~802~~477

41,~~710~~059

TOTAL STOCKHOLDER'S EQUITY

~~11,852~~

~~14,760~~

~~11,852~~$

12,527

1411,~~760~~109

See accompanying notes to consolidated financial statements.

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QWEST CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

References in this report on Form 10-Q, for all periods presented, to "QC," "Qwest," "we," "us," 'the Company" and "our" refer to Qwest Corporation and its consolidated subsidiaries, unless the context otherwise requires. References to "Lumen Technologies" or "Lumen" ~~refers~~refer to our ultimate parent company, Lumen Technologies, Inc. and its consolidated subsidiaries, including Level 3 Parent, LLC ("Level 3") and Level 3 Financing, Inc. (“Level 3 Financing”).

Note 1—Background

General

We are a ~~facilities-based~~networking ~~technology~~company with the goal of connecting people, data, and ~~communications~~applications ~~company~~quickly, ~~that~~securely ~~provides~~and effortlessly. We are unleashing the world's digital potential by providing a broad array of integrated ~~communications~~ products and services to our ~~business~~domestic and ~~mass~~global ~~markets~~Business customers and our domestic Mass Markets customers. Our specific products and services are detailed in Note 3—Revenue Recognition of this report.

We generate the majority of our total consolidated operating revenue from services provided in the 14-state region of Arizona, Colorado, Idaho, Iowa, Minnesota, Montana, Nebraska, New Mexico, North Dakota, Oregon, South Dakota, Utah, Washington and Wyoming. We refer to this region as our local service area.

Basis of Presentation

Our consolidated balance sheet as of December 31, ~~2023~~2024, 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 ~~nine~~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~~2024.

The accompanying consolidated financial statements include our accounts and the accounts of our subsidiaries. Intercompany amounts and transactions with our consolidated subsidiaries have been eliminated. Transactions with our non-consolidated affiliates (Lumen Technologies and its other subsidiaries, referred to herein as affiliates) have not been eliminated.

~~Operating~~We ~~lease~~reclassified ~~assets~~certain ~~are~~prior ~~included~~period inamounts ~~Other,~~to ~~net~~conform ~~under~~to ~~goodwill~~the ~~and~~current ~~other~~period ~~assets~~presentation, onincluding ~~our~~the ~~consolidated~~recategorization ~~balance~~of ~~sheets.~~our ~~Current~~Business ~~operating~~revenue ~~lease~~by ~~liabilities~~product ~~are~~category. ~~included~~See inNote ~~Other~~3—Revenue ~~under~~Recognition ~~accrued~~for ~~expenses~~additional ~~and~~information. ~~other~~These ~~liabilities~~changes onhad ~~our~~no ~~consolidated~~impact ~~balance~~on ~~sheets.~~total ~~Noncurrent~~ operating ~~lease~~revenue, ~~liabilities~~total ~~are~~operating ~~included~~expenses inor ~~Other~~net ~~under~~income ~~deferred~~for ~~credits~~any ~~and other liabilities on our consolidated balance sheets~~period.

We reclassified certain prior period amounts to conform to the current period presentation, including our revenue by product and service categories. See Note 3—Revenue Recognition for additional information. These changes had no impact on total operating revenue, total operating expenses or net income for any period.Segments

~~During~~Our ~~2023,~~operations weare ~~identified~~integrated ~~errors~~into inand ~~our previously~~ reported ~~consolidated~~as ~~financial~~part ~~statements~~of ~~related~~Lumen ~~to accounts receivable and accounts payable~~Technologies. ~~The~~Lumen's ~~errors~~CEO ~~are~~is ~~the~~our ~~result~~chief ofoperating ~~understated~~decision ~~revenues~~maker ~~from~~("CODM") ~~one~~and ofreviews our ~~legacy~~financial ~~mainframe~~information ~~billing~~on ~~systems~~an ~~and~~aggregate ~~understated~~basis ~~network~~only ~~expenses~~in ~~for~~connection ~~periods~~with ~~prior~~our toquarterly ~~2021.~~and Weannual ~~have~~reports ~~recorded~~that anwe ~~increase~~file towith ~~our~~the ~~retained~~SEC. ~~earnings~~Our byCODM ~~$13~~assesses ~~million,~~performance ~~reflected~~and inallocates ~~our~~resources ~~January~~in 1,conjunction ~~2023~~with and ~~September~~based ~~30,~~on ~~2023~~the ~~retained~~operations ~~earnings in our consolidated statements~~ of ~~stockholders'~~Lumen ~~equity in this report~~Technologies. ~~Refer~~Consequently, towe ~~Note~~do ~~1—Background~~not ~~and~~provide ~~Summary~~our ofdiscrete ~~Significant~~financial ~~Accounting~~information ~~Policies~~ to the ~~consolidated~~CODM ~~financial statements and accompanying notes in Part II Item 8 of our Annual Report~~ on ~~Form~~a ~~10-K~~regular ~~for~~basis. ~~the~~As ~~year ended December 31~~such, ~~2023~~we ~~for~~have ~~more~~one ~~information~~reportable segment.

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Segments

Our operations are integrated into and reported as part of Lumen Technologies. Lumen's chief operating decision maker ("CODM") is our CODM. The CODM 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 Estimates

Effective January 1, 2024, we changed our method of depreciation and amortization for incumbent local exchange carriers ("ILEC") and certain competitive local exchange carriers ("CLEC") fixed assets from the group method of depreciation to straight line by individual asset method. Historically, we have used the group method of depreciation for the property, plant and equipment and amortization of certain intangible capitalized software assets of our ILECs and certain CLECs. Under the group method, all like kind assets were combined into common pools and depreciated under composite depreciation rates. Recent business divestitures by our parent company and asset sales have significantly reduced our composite asset base. We believe the straight-line depreciation method for individual assets is preferable to the group method as it will result in a more precise estimate of depreciation expense and will result in a consistent depreciation method for all our subsidiaries. This change in the method of depreciation and amortization is considered a change in accounting estimate inseparable from a change in accounting principle. The change in accounting estimate decreased depreciation and amortization expense $30 million, $23 million net of tax, and $78 million, $59 million net of tax, for the three and nine months ended September 30, 2024, respectively.

Additionally, 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 by approximately $6 million, $4 million net of tax, and by $18 million, $13 million net of tax, for the three and nine months ended September 30, 2024, respectively.

Summary of Significant Accounting Policies

Refer to the significant accounting policies and accounting pronouncements adopted in 2024 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~~2024.

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 potential magnitude of program transactions. The adoption of ASU 2022-04 did not have any impact on 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 any impact on our consolidated financial statements.

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Adoption of Other ASU With No Impact

On January 1, 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 ASUs did not have any impact on our consolidated financial statements.

Recently Issued Accounting Pronouncements

In ~~December~~November ~~2023~~2024, the ~~Financial Accounting Standards Board (“~~FASB”) issued ASU ~~2023~~2024-0904, ~~“Income~~"Debt—Debt ~~Taxes~~with ~~(Topic~~Conversion ~~740):~~and ~~Improvements~~Other toOptions ~~Income Tax Disclosures”~~ (~~“ASU~~Subtopic ~~2023~~470-~~09”~~20).: ~~This~~Induced ~~ASU~~Conversions ~~requires~~of ~~public~~Convertible ~~business~~Debt ~~entities~~Instruments." toThis ~~annually~~ASU ~~(i)~~clarifies ~~disclose specific categories in~~ the ~~rate~~requirements ~~reconciliation and (ii) provide additional information~~ for ~~reconciling~~determining ~~items~~whether ~~that~~certain ~~meet~~settlements aof ~~quantitative~~convertible ~~threshold~~debt ~~(if~~instruments ~~the~~should ~~effect~~be ofaccounted ~~those~~for ~~reconciling~~as ~~items~~induced isconversions ~~equal~~rather ~~to or greater~~ than 5as ~~percent~~debt ~~of the amount computed by multiplying pretax income or loss by the applicable statutory income tax rate)~~extinguishments. ~~ASU~~This ~~2023-09~~standard ~~will~~is ~~become~~ effective for usthe inannual ~~the~~period of fiscal ~~year~~2026, ~~2025~~ and early adoption is permitted. As of ~~September~~March 3031, ~~2024~~2025, we ~~have~~did not ~~early~~have ~~adopted~~any ~~this~~outstanding ~~ASU~~convertible ~~and~~debt ~~are~~instruments ~~currently~~and ~~evaluating~~do ~~its~~not ~~impact~~expect onthis ~~our~~ASU ~~consolidated~~will ~~financial~~have ~~statements,~~any ~~including~~impact ~~our~~on ~~annual disclosure within~~ our ~~Income~~consolidated ~~Taxes~~financial ~~note~~statements.

In November ~~2023~~2024, the FASB issued ASU ~~2023~~2024-0703, ~~“Segment~~"Disaggregation ~~Reporting~~of ~~(Topic~~Income ~~280):~~Statement ~~Improvements~~Expenses." toThis ~~Reportable~~ASU ~~Segment~~requires ~~Disclosures”~~additional ~~(“ASU~~footnote ~~2023-07”).~~disclosure ~~This~~of ~~ASU~~the isdetails ~~intended~~of tocertain ~~improve~~income ~~reportable~~statement ~~segment~~expense ~~disclosure~~line ~~requirements~~items ~~primarily~~as ~~through~~well ~~enhanced~~as ~~disclosures~~additional disclosure about ~~significant~~selling ~~segment~~ expenses. This ~~ASU~~standard ~~will~~is ~~become~~ effective for ~~fiscal~~the ~~years~~annual ~~beginning~~period ~~after~~of ~~December~~fiscal 152027, ~~2023,~~ and ~~interim~~early ~~periods within fiscal years beginning after December 15, 2024. Early~~ adoption is permitted. AsThe ofguidance ~~September~~is ~~30,~~to ~~2024,~~be weapplied ~~have~~prospectively, ~~not~~with ~~early~~the ~~adopted~~option ~~this~~for ~~ASU~~retrospective ~~and~~application. We are currently evaluating ~~its~~the impact onthe ~~our~~adoption ~~consolidated~~of ~~financial~~this ~~statements~~standard will have on our disclosures.

~~Note~~In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” This ASU requires that public business entities must annually (1) disclose specific categories in the rate reconciliation and (2~~—Goodwill~~) 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). This ASU becomes effective for us for the annual period of fiscal 2025. We anticipate adopting this ASU for the year ended December 31, 2025, and ~~Other~~expect ~~Intangible~~the ~~Assets~~Income Taxes footnote 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, 2025 will align with the standard. We do not anticipate this standard will affect our operating results.

Note 2—Goodwill and ~~other~~Intangible ~~intangible assets consisted of the following:~~Assets

	September 30, 2024		December 31, 2023
	(Dollars in millions)
Goodwill, less accumulated impairment losses of $2,405 and $2,405	$	6,955	6,955
Other intangible assets, less accumulated amortization of $1,964 and $1,966	$	92	103

Goodwill and Intangible assets, net on our consolidated balance sheets consisted of the following:

Substantially all of our goodwill was derived from Lumen's acquisition of us where the purchase price exceeded the fair value of the net assets acquired. As of September 30, 2024 and December 31, 2023, the gross carrying amount of goodwill and other intangible assets was $9.0 billion.


	March 31, 2025		December 31, 2024
	(Dollars in millions)
Goodwill, less accumulated impairment losses of $2,405 and $2,405	$	6,955	6,955
Intangible assets, less accumulated amortization of $1,702 and $1,841	$	95	84

As of March 31, 2025 and December 31, 2024, the gross carrying amount of goodwill and intangible assets was $8.8 billion and $8.9 billion.

Substantially all of our goodwill was derived from Lumen's acquisition of us in which 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.

~~Second~~Total ~~Quarter~~amortization ~~2023~~expense ~~Goodwill~~for ~~Impairment~~finite-lived ~~Analysis~~intangible assets for the three months ended March 31, 2025 and 2024 totaled $8 million and $13 million, respectively.

The sustained decline in Lumen's share price during the second quarter of 2023 was considered a triggering event requiring evaluation of goodwill impairment; as such, we estimated the fair value using only the market approach. Applying this approach, we utilized company comparisons and analyst reports within the telecommunications industry which supported a range of fair values derived from annualized revenue and Earnings Before Interest, Tax, Depreciation and Amortization ("EBITDA") multiples between 1.5x and 4.3x and 4.6x and 10.5x, respectively. We selected a revenue multiple within and an EBITDA multiple below these comparable market multiples. For the three months ended June 30, 2023, based on our assessment performed as described above, we concluded that our goodwill was not impaired.11

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The market approach that we used in the quarter ended June 30, 2023 incorporated estimates and assumptions related to the forecasted results for the remainder of the year, including revenues, expenses, and the achievement of certain strategic initiatives. In developing the market multiples, we considered observed trends of our industry participants. Our assessment included many factors that required significant judgment. Alternative interpretations of these factors could have resulted in different conclusions.

The amortization expense for finite-lived intangible assets for the three months ended September 30, 2024 and 2023 totaled $4 million and $17 million, respectively, and $29 million and $50 million for the nine months ended September 30, 2024 and 2023, respectively.

	(Dollars in millions)
2024 (remaining three months)	$	9
2025	28
2026	17
2027	13
2028	10
2029 and thereafter	15
Total finite-lived intangible assets future amortization expense	$	92

Note 3—Revenue Recognition

We categorize our revenue derived from our operations based on the customers we serve, as follows: (i) revenue derived from serving our ~~mass~~Mass ~~markets~~Markets customers, are categorized primarily within the first three categories listed below, ~~and~~(ii) ~~our~~ revenue derived from ~~our operations~~ servicing our ~~business~~Business customers, are categorized primarily in the 'Harvest', 'Nurture' and 'Grow' categories listed below, and (iii) revenue derived from serving our affiliates are categorized in the 'Affiliate Services' category listed:

•Other Broadband, under which we provide primarily lower speed broadband services to residential and small business customers utilizing our copper-based network infrastructure;

•Voice and Other, under which we derive revenues from (i) providing local and long-distance services, professional services, and other ancillary services, (ii) federal broadband and state support payments, and (iii) equipment, IT solutions and other services;

•Fiber Broadband, under which we provide high speed broadband services to residential and small business customers utilizing our fiber-based network infrastructure;

•Harvest, which includes our legacy services managed for cash flow, including Time Division Multiplexing ~~("TDM")~~ voice and private line services;

•Nurture, which includes our more mature offerings, including primarily ethernet;

•Grow, which includes existing and emerging products and services in which we are significantly investing, including our dark fiber and wavelengths services; and

•Affiliate Services, which are (i) communications services that we provide to our affiliates and also provide to external customers and (ii) application development and support services that we provide to our affiliates, as described further in Note 86—Affiliate Transactions.

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Reconciliation of Total Revenue to Revenue from Contracts with Customers

The following tables provide our total revenue by product and service category as well as the amount of revenue that is not subject to ASC 606, "Revenue from Contracts with Customers" ("ASC 606"), but is instead governed by other accounting standards:

Three Months Ended September 30, 2024

Three Months Ended September 30, 2023

Three Months Ended March 31, 2025

~~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)~~

(Dollars in millions)

Other Broadband

~~226~~

~~(19)~~

~~207~~

~~271~~$

205

(2318)

~~248~~187

Voice and Other

~~129~~

~~(2)~~

~~127~~

~~145~~120

(4)

~~141~~116

Fiber Broadband

~~(3)~~

~~120~~86

(3)

~~117~~83

Harvest

~~223~~

~~(29)~~

~~194~~

~~261~~211

(3629)

~~225~~182

Nurture

~~(2)~~

9684

(2)

9482

Grow

~~(2)~~

3134

—(2)

3132

Affiliate Services

~~570~~

~~(12)~~

~~558~~

~~526~~482

(1112)

~~515~~470

Total revenue

~~1,363~~

~~(69)~~

~~1,294~~

~~1,450~~$

1,222

(7970)

1,~~371~~152

	Nine Months Ended September 30, 2024				Nine Months Ended September 30, 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)
Other Broadband	$	715	(60)	655	847	(72)	775
Voice and Other	394		(10)	384	451	(12)	439
Fiber Broadband	289		(9)	280	365	(9)	356
Harvest	702		(92)	610	803	(109)	694
Nurture	268		(6)	262	295	(6)	289
Grow	100		(4)	96	108	—	108
Affiliate Services	1,676		(36)	1,640	1,589	(33)	1,556
Total revenue	$	4,144	(217)	3,927	4,458	(241)	4,217

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	Three Months Ended March 31, 2024
			Total Revenue		Adjustments for Non-ASC 606 Revenue(1)	Total Revenue from Contracts with Customers
		(Dollars in millions)
Other Broadband			$	252	(21)	231
Voice and Other			133		(4)	129
Fiber Broadband			99		(3)	96
Harvest			239		(32)	207
Nurture			89		(2)	87
Grow			34		—	34
Affiliate Services			546		(12)	534
Total revenue			$	1,392	(74)	1,318

____________________________________________________________

(1)Includes regulatory revenue and lease revenue not within the scope of ASC 606.

Operating Lease Revenue

Qwest leases various data transmission capacity, office facilities, switching facilities, and other network sites to third parties under operating leases. Lease and sublease revenue are included in Operating Revenue in our consolidated statements of operations.

For the three months ended ~~September~~March 3031, ~~2024~~2025 and ~~2023~~2024, our gross rental revenue was $67 million and $7671 million, ~~respectively,~~ which represented approximately 5% of our operating revenue for both ~~periods. For~~ the ~~nine~~three months ended ~~September~~March 3031, ~~2024~~2025 and ~~2023, our gross rental revenue was $209 million and $234 million, respectively, which represented approximately 5% of our operating revenue for both periods~~2024.

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Customer Receivables and Contract Balances

The following table provides balances of customer receivables, contract assets, and contract liabilities ~~as of September 30, 2024 and December 31, 2023~~:

	September 30, 2024		December 31, 2023
	March 31, 2025		December 31, 2024
	(Dollars in millions)
Customer receivables, less allowance of $26 and $29 (1)	$	198	210
Customer receivables, less allowance of $21 and $23 (1)	$	197	205
Contract assets	7		7
Contract liabilities	236		244
Contract liabilities	246		269

______________________________________________________________________

(1)Customer receivables includes affiliate receivables.

Contract liabilities consist of consideration we have received from our customers or billed in advance of providing goods or services promised in the future. We defer recognizing this consideration as revenue until we have satisfied the related performance obligation to the customer. Contract liabilities include recurring services billed one month in advance and installation and maintenance charges that are deferred and recognized over the actual or expected contract term, which ~~typically~~ ranges from one to five years depending on the service. Contract liabilities are included within Deferred revenue in our consolidated balance sheets. During the three ~~and nine~~ months ended ~~September~~March 3031, ~~2024~~2025, we recognized $14122 million ~~and $162 million, respectively,~~ of revenue that was included in contract liabilities of $~~269~~244 million as of January 1, ~~2024~~2025. During the three ~~and nine~~ months ended of ~~September~~March 3031, ~~2023~~2024, we recognized $10135 million ~~and $159 million, respectively,~~ of revenue that was included in contract liabilities of $~~343~~269 million as of January 1, ~~2023~~2024.

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Performance Obligations

As of ~~September~~March 3031, ~~2024~~2025, we expect to recognize approximately $2.61 billion of revenue in the future related to performance obligations associated with existing customer contracts that are partially or wholly unsatisfied. As of ~~September~~March 3031, ~~2024~~2025, the transaction price related to unsatisfied performance obligations that are expected to be recognized for the remainder of ~~2024~~2025, ~~2025~~2026 and thereafter was $~~421~~653 million, $~~1.1~~709 ~~billion~~million and $~~1.1~~757 ~~billion~~million, 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 tables provide changes in our contract acquisition costs and fulfillment costs:

	Three Months Ended September 30, 2024				Three Months Ended September 30, 2023
				Three Months Ended March 31, 2025
	~~Acquisition Costs~~		~~Fulfillment Costs~~		Acquisition Costs		Fulfillment Costs
	~~(Dollars in millions)~~			(Dollars in millions)
Beginning Balance	$	56	47		59$	51	4546
Cost Incurred	6		7		105		9
Amortization	~~(9)~~		~~(8)~~		(128)		(98)
Ending Balances	$	53	46		57$	48	4547


	Three Months Ended March 31, 2024
		Acquisition Costs		Fulfillment Costs
	(Dollars in millions)
Beginning Balance		$	58	46
Cost incurred		10		10
Amortization		(11)		(9)
Ending Balances		$	57	47

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	Nine Months Ended September 30, 2024			Nine Months Ended September 30, 2023
	Acquisition Costs		Fulfillment Costs	Acquisition Costs	Fulfillment Costs
	(Dollars in millions)
Beginning Balance	$	58	46	61	46
Cost incurred	25		26	32	28
Amortization	(30)		(26)	(36)	(29)
Ending Balances	$	53	46	57	45

Acquisition costs include commission fees paid to employees as a result of obtaining contracts. Fulfillment costs include third party and internal costs associated with the provision, installation and activation of communications services to customers, including labor and materials consumed for these activities.

~~Deferred~~We amortize deferred acquisition and fulfillment costs ~~are amortized~~ based on the transfer of services on a straight-line basis over the average contract life of 5047 months for ~~mass~~Mass ~~markets~~Markets customers and ~~average~~34 ~~contract life of 35~~ months for ~~business~~Business customers, respectively. ~~Amortized~~We include amortized fulfillment costs ~~are included~~ in cost of services and products and amortized acquisition costs are included in selling, general and administrative expenses in our consolidated statements of operations. ~~The~~We include the amount of these deferred costs that are anticipated to be amortized in the next 12 months ~~are included~~ in Other ~~Current~~current ~~Assets~~assets, net on our consolidated balance sheets. ~~The~~We include the amount of deferred costs expected to be amortized beyond the next 12 months ~~is included~~ in Other ~~Non-Current~~assets, ~~Assets~~net on our consolidated balance sheets. ~~Deferred~~We assess deferred acquisition and fulfillment costs ~~are assessed~~ for impairment on a quarterly basis.

~~Note 4—Credit Losses on Financial Instruments~~14

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.

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~~The~~Note ~~following~~4—Long-Term ~~table presents the activity of our allowance for credit losses by accounts receivable portfolio for the nine months ended September 30, 2024:~~Debt

	Business		Mass Markets	Total
	(Dollars in millions)
As of December 31, 2023	$	14	20	34
Provision for expected losses	8		27	35
Write-offs charged against the allowance	(8)		(32)	(40)
Recoveries collected	—		2	2
Ending balance at September 30, 2024	$	14	17	31

Note 5—Long-Term Debt

The following table reflects our consolidated long-term debt as of the dates indicated below, including unamortized discounts and premiums and unamortized debt issuance costs:

	Interest Rates (1)	Maturities (1)	~~September~~March 3031, ~~2024~~2025		December 31, ~~2023~~2024
			(Dollars in millions)
Senior notes	6.50% - 7.75%	2025-2057	$	1,~~974~~973	1,~~986~~973
Term loan (2)	SOFR + 2.50%	2027	—		215
Finance leases	Various	Various	3		3
Finance lease and other obligations	Various	Various	4		4
Unamortized premiums, net			1		1
Unamortized premiums, net			2		4
Unamortized debt issuance costs			(50)		(50)
Unamortized debt issuance costs			(50)		(52)
Total long-term debt			1,927		1,927
Total long-term debt			$	1,930	2,157
Less current maturities			(239)		(239)
Less current maturities			(241)		(1)
Long-term debt, excluding current maturities			$	1,688	1,688
Long-term debt, excluding current maturities			$	1,689	2,156

_______________________________________________________________________________

(1)As of ~~September~~March 3031, ~~2024~~2025.

(2)The Term Loan had an interest rate of 7.970% as of December 31, 2023.

Long-Term Debt Maturities

Set forth below is the aggregate principal amount of our long-term debt as of ~~September~~March 3031, ~~2024~~2025 (excluding unamortized premiums, net and unamortized debt issuance costs) maturing during the following years:

	(Dollars in millions)
2024 (remaining three months)	$	—
2025 (remaining nine months)	$	238
2025	239
2026	1
2027	1
2028	—
2029 and thereafter	1,737
2029	—
Total long-term debt	$	1,978
2030 and thereafter	1,736
Total long-term debt	$	1,976

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Impact of Recent Debt Transactions

On March 22, 2024 (the "Effective Date"), Lumen Technologies, Level 3 Financing, Qwest Corporation and a group of creditors holding a majority of our consolidated debt completed transactions contemplated under the amended and restated transaction support agreement ("TSA") that such parties entered into on January 22, 2024 (the "TSA Transactions"), including (i) the repayment of our term loan maturing 2027 and (ii) the termination, repayment or exchange of previous commitments and debt of our affiliates and the issuance of new term loan facilities, notes, and revolving credit facilities by our affiliates.

During the third quarter of 2024, we repurchased approximately $12 million aggregate principal amount of our senior notes maturing in 2025.

Qwest Guarantees of Lumen Debt

Lumen’s obligations under its ~~new~~ credit agreements entered into on March 22, 2024 and its ~~new~~ superpriority secured senior notes issued on and after March 22, 2024 are unsecured, but Qwest Corporation and certain of its subsidiaries have provided an ~~unconditional~~ unsecured guarantee of ~~payment of~~ Lumen’s obligations under these agreements and senior notes. See Note 6—Long-Term Debt and Note Payable - Affiliate in Item 8 of Part II of our Annual Report on Form 10-K for the year ended December 31, 2024.

~~Senior~~Other ~~Notes~~Related ~~and Intercompany Debt~~Information

For information about our senior notes, our 2024 debt transactions and our intercompany debt arrangement, see Note 6—Long-Term Debt and Note Payable - Affiliate to the financial statements included in Item 8 of Part II of our Annual Report on Form 10-K for the year ended December 31, ~~2023~~2024.

Compliance

As of ~~September~~March 3031, ~~2024~~2025, we believe we were in compliance with the financial covenants contained in our material debt agreements in all material respects.

~~Note 6—Severance~~15

Periodically, we reduce our workforce and accrue liabilities for the related severance costs. These workforce reductions result primarily from the progression or completion of our post-acquisition integration plans, increased competitive pressures, cost reduction initiatives, process improvements through automation and reduced workloads due to reduced demand for certain services.

During April 2024, we reduced our workforce by approximately 3% as a part of our efforts to change our workforce composition to reflect our ongoing transformation and cost reduction opportunities that align with our shapeshifting and focus on our strategic priorities. As a result of this plan, we incurred severance and related costs of approximately $25 million during the second quarter of 2024. We have not incurred, and do not expect to incur, material impairment or exit costs related to this workforce reduction.

Changes in our accrued liabilities for severance expenses were as follows:

	Severance
	(Dollars in millions)
Balance at December 31, 2023	$	1
Accrued to expense	30
Payments, net	(28)
Balance at September 30, 2024	$	3

Note 7—Fair Value of Financial Instruments

Our financial instruments consist of cash and cash equivalents, restricted cash, accounts receivable, advances to and from affiliates, accounts payable and long-term debt, excluding finance lease and other obligations. Due to their short-term nature, the carrying amounts of our cash and cash equivalents, restricted cash, accounts receivable, advances to and from affiliates and accounts payable approximate their fair values.

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Note 5—Fair ~~value~~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~~Financial 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 using the below-described fair value hierarchy.Instruments

WeOur ~~determined~~financial ~~the~~instruments ~~fair~~consist ~~values~~ of ~~our~~cash ~~long-term~~and ~~debt~~cash equivalents, ~~including~~restricted ~~the~~cash, ~~current~~accounts ~~portion~~receivable, ~~based~~advances onto ~~quoted~~and ~~market~~from ~~prices~~affiliates, ~~where~~note ~~available~~receivable or- affiliates, ifaccounts ~~not~~payable, ~~available~~and long-term debt, ~~based~~excluding onfinance ~~inputs~~leases. ~~other~~Due ~~than~~to ~~quoted~~their ~~market~~short-term ~~prices~~nature, inthe ~~active~~carrying ~~markets~~amounts ~~that~~of ~~are~~our ~~either~~cash ~~directly~~and orcash ~~indirectly~~equivalents, ~~observable~~restricted ~~such~~cash, asaccounts ~~discounted~~receivable, ~~future~~advances ~~cash~~to ~~flows~~and ~~using~~from ~~current~~affiliates, ~~market~~note ~~interest~~receivable ~~rates~~- affiliates, 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 using the below-described fair value hierarchy. We determined the fair values of our long-term debt, including the current portion, based on quoted market prices where available or, if not available, based 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 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 ~~September~~March 3031, ~~2024~~2025 and December 31, ~~2023~~2024, as well as the input level used to determine the fair values indicated below:

		September 30, 2024			December 31, 2023
		March 31, 2025			December 31, 2024
	InputLevel	CarryingAmount		FairValue	CarryingAmount	FairValue
	Input Level	CarryingAmount		Fair Value	CarryingAmount	Fair Value
		(Dollars in millions)
Liabilities—Long-term debt (excluding finance lease and other obligations)	2	$	1,926	1,373	2,153	1,162
Liabilities—Long-term debt (excluding finance leases)	2	$	1,924	1,410	1,924	1,462

Note 86—Affiliate Transactions

We provide incumbent local exchange carrier telecommunications services to our affiliates that we also provide to external customers. ~~These~~We periodically review and update our prices for affiliate network services ~~are~~to ~~priced~~align atwith regulated rates, where applicable, or ~~otherwise~~competitive atmarket-based rates wecharged ~~believe~~to ~~are~~external ~~consistent~~customers, ~~with~~taking ~~non-regulated~~into ~~market-based~~consideration ~~rates~~the ~~charged~~average third party customer contract term to ~~external~~which ~~customers~~those affiliate services pertain. These services are billed directly to our affiliates and recognized as affiliate revenue on our consolidated statements of operations.

We also provide to our affiliates shared services in the form of application development and support services, as well as network support and technical services, and administrative and corporate support. In this regard, we function as a service company to other Lumen affiliates, and correspondingly recognize affiliate revenue based on the costs for the services that we provide to those affiliates.

Whenever possible, costs for shared services are incurred directly by our affiliates for the services they use. When these shared costs are not directly incurred, they are allocated among all affiliates based upon what we determine to be the most reasonable method, first using cost causative measures, or, if no cost causative measure is available, using a general allocator. 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.

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On March 31, 2025, we entered into an unsecured revolving promissory note with our ultimate parent Lumen Technologies, under which Lumen Technologies is permitted to borrow up to $3.0 billion from us at an 8.3% interest rate per annum. The ~~following~~principal ~~table~~amount ~~provides~~is ~~details~~payable ofupon ~~affiliate~~demand ~~revenue~~by ~~for~~us and prepayable by Lumen Technologies at any time, but no later than March 31, 2030, which will automatically renew on the ~~three~~maturity date for successive 12-month periods unless we elect otherwise. The facility has covenants and ~~nine~~is ~~months~~subject ~~ended~~to ~~September~~other 30limitations. As of March 31, ~~2024~~2025, ~~and~~we ~~2023:~~had $900 million due from Lumen Technologies under this promissory note.

	Three Months Ended September 30,			Nine Months Ended September 30,
	2024		2023	2024	2023
	(Dollars in millions)
Direct affiliate revenue	$	423	395	1,241	1,189
Allocated affiliate revenue	147		131	435	400
Total affiliate revenue	$	570	526	1,676	1,589

The following table provides details of affiliate revenue:

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 these services using the allocation methodologies described above.


	Three Months Ended March 31,
			2025		2024
		(Dollars in millions)
Direct affiliate revenue			$	345	401
Allocated affiliate revenue			137		145
Total operating revenue—affiliates			$	482	546

~~Note~~We ~~9—Commitments~~also purchase services from our affiliates including telecommunication services, ~~Contingencies~~insurance, flight services and ~~Other~~other ~~Items~~support services such as legal, regulatory, finance administration and executive support. Our affiliates charge us for these services using the allocation methodology described above.

Note 7—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.

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 ~~September~~both 30March 31, ~~2024~~2025 and December 31, ~~2023~~2024 we had accrued $17 million ~~and $15 million~~, ~~respectively,~~ in the aggregate for our litigation and non-income tax contingencies, which are included in Other ~~under~~current ~~Current~~liabilities ~~Liabilities~~ or Other ~~under~~liabilities ~~Deferred Credits and Other Liabilities~~ in our consolidated balance sheets as of such dates. We cannot at this time estimate the reasonably possible loss or range of loss, if any in excess of this $17 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.

In this Note, a reference to a "putative" class action means a class has been alleged, but not certified, in that matter.

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Principal Proceedings

Environmental Litigation

Parish of St. Mary. On July 9, 2024, a putative class action complaint was filed in the 16th Judicial District Court for the Parish of St. Mary, State of Louisiana, Case 138575 asserting claims on behalf of all parishes, municipalities, and citizens owning real properties in the State of Louisiana that have been affected by lead-sheathed telecommunications cables installed by AT&T and Lumen or their predecessors. The complaint seeks damages and injunctive relief under Louisiana state law. The case ~~has~~was ~~been~~ removed to the United States District Court Western District of Louisiana Lafayette Division, Case 6:24-CV-01001-RRS-DJA. On December 6, 2024, the plaintiffs voluntarily dismissed the class action complaint without prejudice. On December 13, 2024, St. Mary’s Parish along with other parishes, municipalities, and two individuals served a notice of intent to file citizen suit under the Louisiana Environmental Quality Act, asserting claims identical to the class action which the plaintiffs voluntarily dismissed. In April 2025, the Village of Parks (one of the municipalities which had served a notice of intent to file a citizen suit) served Lumen with a petition in an action captioned Village of Parks v. Lumen Technologies, Inc., Case 95026, in the 16th Judicial District Court for the Parish of St. Martin, State of Louisiana. The Village of Parks petition seeks damages and injunctive relief under Louisiana state law.

Blum. On November 6, 2023, a putative class action complaint was filed in the 16th Judicial District Court for the Parish of St. Mary, State of Louisiana, Case 137935 asserting claims on behalf of all citizens owning real properties in the State of Louisiana that have been affected by lead-sheathed telecommunications cables installed by AT&T, BellSouth, Verizon, and Lumen or their predecessors. The complaint seeks damages and injunctive relief under Louisiana state law. The case has been removed to Federal Court in the United States District Court Western District of Louisiana Lafayette Division, Case 6:23-CV-01748. In December 2024, the plaintiffs filed an amended complaint and a motion for remand.

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FCRA Litigation

In November 2014, a putative class action complaint captioned Bultemeyer v. CenturyLink, Inc. was filed in the United States District Court for the District of Arizona, Case CV-14-02530-PHX-SPL, alleging violations of the Fair Credit Reporting Act (the "FCRA"). In February 2017, the case was dismissed for lack of standing. ~~Plaintiff~~The plaintiff appealed and the 9th Circuit reversed and remanded. Class certification was contested and ultimately granted in 2023. The 9th Circuit denied Lumen’s request to appeal the class certification ruling. A jury trial was conducted in September 2024. The jury found that CenturyLink willfully violated the FCRA, and awarded each class member $500 for statutory damages and $2,000 for punitive damages. IfThe ~~the~~district ~~verdict~~court isdenied ~~not~~Lumen’s ~~set aside in connection with~~ post-trial ~~motion~~motions ~~practice~~for relief, and Lumen ~~will~~has ~~appeal~~appealed the judgment to the 9th Circuit. We have not accrued a contingent liability for this matter. While liability is ~~ultimately~~ possible, we have not determined it to be probable, and ~~cannot estimate any final~~ damages exposure, if any, ~~which~~is ~~remains~~ uncertain.

Billing Practices Suits

In June 2017, a former employee of a Lumen Technologies subsidiary filed an employment lawsuit against Lumen Technologies (at the time named CenturyLink, Inc.) claiming that she was wrongfully terminated for alleging that Lumen charged some of its retail customers for products and services they did not authorize. Thereafter, based in part on the allegations made by the former employee, several legal proceedings were filed, including consumer class actions in federal and state courts, a series of securities investor class actions in federal courts, and several shareholder derivative actions in federal and Louisiana state courts. The derivative cases were brought on behalf of CenturyLink, Inc. against certain current and former officers and directors of the Company and seek damages for alleged breaches of fiduciary duties.

We have settled the consumer and securities investor class actions, and the derivative actions.

Qwest has engaged in discussions regarding related claims with a number of state attorneys general, and has entered into agreements settling certain of the consumer practices claims asserted by several state attorneys general.

Huawei Network Deployment Investigations

Qwest has received requests from the following federal agencies for information relating to the use of equipment manufactured by Huawei Technologies Company ("Huawei") in networks operated by Lumen and Qwest.

•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 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.18

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Marshall Fire Litigation.

On December 30, 2021, a wildfire referred to as the Marshall Fire ignited near Boulder, Colorado. The Marshall Fire killed two people, and it burned thousands of acres, including entire neighborhoods. Approximately 300 lawsuits naming various defendants and asserting various claims for relief have been filed. To date, three of those name Qwest Corporation as being at fault: Allstate Fire and Casualty Insurance Company, et al., v. Qwest Corp., et al., Case 2023-cv-3048, and Wallace, et al. v. Qwest Corp., et al., Case 2023-cv-30488, both of which have been consolidated with Kupfner, et al., v. Public Service Company of Colorado, et al., Case 2022-cv-30195. The consolidated proceeding is pending in Colorado District Court, Boulder, Colorado, Preliminary estimates of potential damage claims exceed $2 billion.

911 Surcharge

In June 2021, the Company was served with a complaint filed in the Santa Fe County District Court by Phone Recovery Services, LLC (“PRS”), acting on behalf of the State of New Mexico. The complaint claims Qwest Corporation and CenturyTel of the Southwest have violated the New Mexico Fraud Against Taxpayers Act since 2004 by failing to bill, collect, and remit certain 911 surcharges from customers. Through pre-trial proceedings, the Court ~~has~~ narrowed the issues to be resolved by jury. On August 21, 2024, a jury decided the remaining issues, and consequently all claims asserted, in Lumen's favor. ~~Plaintiff~~The plaintiff has filed a Notice of Appeal and Lumen submitted a cross-appeal as to the original motion to dismiss and motion for summary judgment.

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, miscellaneous third-party tort actions, or commercial disputes.

We are currently defending several patent infringement lawsuits asserted against us by non-practicing entities, 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.

We are subject to various federal, state, and local environmental protection and health and safety laws. From time to time, we are subject to judicial and administrative proceedings brought by various governmental authorities under these laws. Several such proceedings are currently pending, but none is reasonably expected to exceed $300,000 in fines and penalties. In addition, in the past we acquired companies that had installed lead-sheathed cables several decades earlier, or had 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 outcomes of these other proceedings described under this heading are 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 14—Commitments, Contingencies and Other Items to the financial statements included in Item 8 of Part II of our Annual Report on Form 10-K for the year ended December 31, ~~2023~~2024. 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 we currently consider ~~immaterial~~insignificant may ultimately affect us materially.

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Note 108—~~Dividends~~Other Financial Information

~~From~~Other ~~time~~Current ~~to time we may declare and pay dividends to our direct parent company~~Assets, ~~Qwest Services Corporation ("QSC"), sometimes in excess of our earnings to the extent permitted by applicable law. Our debt covenants do not currently limit the amount of dividends we can pay to QSC.~~net

~~During~~The ~~the~~following ~~nine~~table ~~months~~presents ~~ended~~details ~~September~~of ~~30,~~Other ~~2024~~current ~~and September 30~~assets, ~~2023,~~net ~~we declared and paid no dividends to QSC. Dividends paid, when applicable, are reflected~~ on our consolidated ~~statements~~balance ~~of cash flows as financing activities.~~sheets:

Note 11—Other Financial Information


	March 31, 2025		December 31, 2024
	(Dollars in millions)
Prepaid expenses	$	79	98
Contract acquisition costs	25		26
Contract fulfillment costs	27		26

Other	—		2
Total Other current assets, net	$	131	152

Other Current Assets

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

	September 30, 2024		December 31, 2023
	(Dollars in millions)
Prepaid expenses	$	44	48
Contract acquisition costs	28		34
Contract fulfillment costs	26		28
Assets held for sale	29		29
Other	6		5
Total other current assets	$	133	144

Other Current Liabilities

The following table presents details of ~~other~~Other current liabilities on our consolidated balance sheets:

	September 30, 2024		December 31, 2023
	March 31, 2025		December 31, 2024
	(Dollars in millions)
Current affiliate obligation	$	5248	5248
Current operating lease liability	1715		2015
Other	5250		4954
Total other current liabilities	$	121	121
Total Other current liabilities	$	113	117

~~Other~~Included ~~Noncurrent~~in ~~Liabilities~~accounts payable at March 31, 2025 and December 31, 2024 were $38 million and $57 million, respectively, associated with capital expenditures.

~~The~~Other ~~following table presents details of other noncurrent liabilities on our consolidated balance sheets:~~Liabilities

	September 30, 2024		December 31, 2023
	(Dollars in millions)
Unrecognized tax benefits	$	469	442
Deferred revenue	106		109
Noncurrent operating lease liability	50		47
Other	86		81
Total other noncurrent liabilities	$	711	679

The following table presents details of Other liabilities on our consolidated balance sheets:


	March 31, 2025		December 31, 2024
	(Dollars in millions)
Unrecognized tax benefits	$	461	453
Deferred revenue	103		97
Operating lease liability	52		49
Other	82		86
Total Other liabilities	$	698	685

Note 9—Labor Union Contracts

As of March 31, 2025, approximately 42% of our employees were represented by the Communications Workers of America (CWA) or the International Brotherhood of Electrical Workers (IBEW). 99% of our represented employees are subject to collective bargaining agreements that are scheduled to expire within the twelve-month period ending March 31, 2026.

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Note 12—Labor Union Contracts

As of September 30, 2024, approximately 42% of our employees were represented by the Communications Workers of America ("CWA") or the International Brotherhood of Electrical Workers ("IBEW"). 1% of our represented employees are subject to collective bargaining agreements that are scheduled to expire within the twelve-month period ending September 30, 2025.

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

~~References~~All references to "Notes" in this ~~report~~Item 2 of Part I refer to ~~"QC,"~~the ~~"Qwest,"~~Notes to Consolidated Financial Statements included in Item 1 of Part I of this report. Certain statements in this report constitute forward-looking statements. See "~~we,"~~Special Note Regarding Forward-Looking Statements"~~us"~~ appearing at the beginning of this report and "~~our~~Risk Factors" ~~refer~~referenced toin ~~Qwest~~Item ~~Corporation~~1A ~~and~~of ~~its~~Part ~~consolidated~~II ~~subsidiaries,~~of ~~unless~~this report or other of our filings with the ~~context~~SEC for a discussion of certain factors that could cause our actual results to differ from our anticipated results or otherwise ~~requires~~impact our business, financial condition, results of operations, liquidity, or prospects.

All references to "Notes" in this Item 2 of Part I refer to the Notes to Consolidated Financial Statements included in Item 1 of Part I of this report.

Certain statements in this report constitute forward-looking statements. See "Special Note Regarding Forward-Looking Statements" appearing at the beginning of this report and "Risk Factors" referenced in Item 1A of Part II of this report or other of our filings with the SEC for a discussion of certain factors that could cause our actual results to differ from our anticipated results or otherwise impact our business, financial condition, results of operations, liquidity or prospects.

Overview

Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") included herein should be read in conjunction with the information included in our Annual Report on Form 10-K for the year ended December 31, ~~2023,~~2024 and with the consolidated financial statements and related notes in Item 1 of Part I of this report. The results of operations for the first ~~nine~~three months of the year are not necessarily indicative of the results of operations that might be expected for the entire year.

At ~~September~~March 3031, ~~2024~~2025, we served approximately 1.85 million broadband subscribers. Our methodology for counting broadband subscribers may be different than the methodologies used by other companies.

Macroeconomic Changes

Over the past few years, macroeconomic changes have impacted us and our customers in several ways. On a regular basis, we review and rationalize our lease footprint and may incur accelerated lease costs when we determine to cease using underutilized leased property locations. We did not incur material accelerated lease costs during the nine months ended September 30, 2024.

~~Additionally,~~We we believe macroeconomic changes over the past few years have resulted in (i) increases in certain revenue streams and decreases in others, (ii) operational challenges resulting from inflation and shortages of certain components and other supplies that we use in our business, (iii) delays in our cost transformation initiatives and (iv) delayed decision-making by certain of our customers. None of these effects, individually or in the aggregate, have to date materially impacted our financial performance or financial position.

Industry developments over the past few years have increased fiber construction demand from customers. The resulting increase in construction labor rates increased the cost of enabling units to be capable of receiving ~~our~~Lumen's Quantum Fiber broadband services. ~~From~~We ~~time to time, we~~ believe these factors also occasionally contributed to a delay in attaining ~~our~~ Quantum Fiber buildout targets in our service area.

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~~Continued~~Increasing business and geopolitical uncertainty, new tariffs, supply constraints, or inflationary pressures could materially impact our financial results in a variety of ways, including by increasing our expenses, decreasing our revenues, further delaying our network expansion plans, further delaying customer decision-making, or otherwise interfering with our ability to deliver products and services.

WeTo ~~have~~the ~~historically~~extent ~~generated~~these ~~revenue~~above-mentioned bymacroeconomic ~~entering~~pressures ~~into transactions that utilize fiber or other assets~~continue, onwe ~~our~~could ~~network~~experience toadditional ~~create~~deterioration ~~custom~~in ~~networks for~~ our ~~customers.~~projected Wecash ~~expect~~flows ~~the~~or ~~demand~~market ~~for and size of these transactions to grow. We routinely assess revenue-generating opportunities with respect to these assets through right-of-use agreements~~capitalization, ~~leases~~ or ~~other~~make ~~agreements.~~significant Wechanges ~~may or may not consummate such transactions from time~~ to ~~time, and~~ the ~~revenue~~assumed ~~from~~discount ~~and~~rates ~~obligations~~or ~~associated~~market ~~with~~multiples ~~any~~that ~~such~~we ~~opportunities~~use ~~may~~to bedetermine ~~significant, either individually or in~~ the ~~aggregate.~~fair ~~The~~value ~~completion~~ of ~~any~~our ~~future~~reporting ~~transactions may be subject to customary conditions, and may not be executed in a timely manner, or at all~~units.

These above-mentioned macroeconomic factors, coupled with dis-synergies resulting from our affiliates' 2022 and 2023 divestitures, changes in customer preferences and negotiations with our creditors through the end of the first quarter of 2024, placed additional pressures on our financial performance. These developments contributed to us recognizing $2.4 billion in goodwill impairment charges in the fourth quarter of 2023. Some of these pressures continue to impact us. To the extent these pressures continue, we could experience additional deterioration in our projected cash flows, or make significant changes to the assumed discount rates or market multiples that we use to determine the fair value of our reporting unit. Any of these could result in additional future impairments of our approximately $7.0 billion of remaining goodwill.

Products, Services and Revenue

We categorize our ~~products~~revenue derived from our operations based on the customers we serve, ~~services~~as ~~and~~follows: (i) revenue ~~among~~derived from serving our Mass Markets customers are categorized primarily within the ~~following~~first three categories listed below, (ii) revenue derived from servicing our Business customers are categorized primarily in the 'Harvest', 'Nurture' and 'Grow' categories listed below, and (iii) revenue derived from serving our affiliates are categorized in the 'Affiliate Services' category listed:

•Other Broadband, under which we provide primarily lower speed broadband services to residential and small business customers utilizing our copper-based network infrastructure;

•Fiber Broadband, under which we provide high speed broadband services to residential and small business customers utilizing our fiber-based network infrastructure;

•Harvest, which includes our legacy services managed for cash flow, including Time Division Multiplexing ~~("TDM")~~ voice and private line services;

•Nurture, which includes our more mature offerings, including primarily ethernet;

•Grow, which includes existing and emerging products and services in which we are significantly investing, including our dark fiber and wavelengths services; and

From time to time, we may change the categorization of our products and services.

The following analysis is organized to provide the information we believe will be useful for understanding material trends affecting our business.

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Results of Operations

The following table summarizes the results of our consolidated operations for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2024~~2025 and ~~2023~~2024:

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

2024

2023

2024

2023

2025

2024

~~(Dollars in millions)~~

(Dollars in millions)

Operating revenue

~~1,363~~

~~1,450~~

~~4,144~~$

1,222

41,~~458~~392

Operating expenses

~~865~~

~~966~~

~~2,621~~834

~~2,776~~897

Operating income

~~498~~

~~484~~

~~1,523~~388

~~1,682~~495

Total other expense, net

~~(1)~~

~~(17)~~

(295)

(6316)

Income before income taxes

~~497~~

~~467~~

~~1,494~~383

~~1,619~~479

Income tax expense

~~132~~

~~126~~

~~398~~99

~~426~~126

Net income

~~365~~

~~341~~

~~1,096~~$

284

~~1,193~~353

For a discussion of certain trends that impact our business, see the MD&A discussion of trends impacting Lumen's business included in Lumen's reports filed with the SEC, including most recently its Quarterly Report on Form 10-Q for the quarterly period ended ~~September~~March 3031, ~~2024~~2025.

Operating Revenue

The following tables summarize our consolidated operating revenue recorded under our revenue categories described in Note 3—Revenue Recognition:

	Three Months Ended September 30,			% Change
						Three Months Ended March 31,
	2024		2023
						2025		2024	% Change
	~~(Dollars in millions)~~			(Dollars in millions)
Other Broadband	$	~~226~~	~~271~~	~~(17)~~	%	$	205	252	(19)	%
Voice and Other	~~129~~		~~145~~	~~(11)~~	%	120		133	(10)	%
Fiber Broadband	92		~~120~~	~~(23)~~	%	86		99	(13)	%
Harvest	~~223~~		~~261~~	~~(15)~~	%	211		239	(12)	%
Nurture	90		96	~~(6)~~	%	84		89	(6)	%
Grow	33		31	6	%	34		34	—	%
Affiliate Services	~~570~~		~~526~~	8	%	482		546	(12)	%
Total revenue	$	~~1,363~~	~~1,450~~	~~(6)~~	%	$	1,222	1,392	(12)	%

	Nine Months Ended September 30,			% Change
	2024		2023
	(Dollars in millions)
Other Broadband	$	715	847	(16)	%
Voice and Other	394		451	(13)	%
Fiber Broadband	289		365	(21)	%
Harvest	702		803	(13)	%
Nurture	268		295	(9)	%
Grow	100		108	(7)	%
Affiliate Services	1,676		1,589	5	%
Total revenue	$	4,144	4,458	(7)	%

Total operating revenue decreased by $170 million for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024. Within each product category, these decreases were primarily due to the following factors:

27•Decreases in Other Broadband of $47 million primarily due to fewer Mass Market customers for our lower speed copper-based broadband services;

•Decreases in Voice and Other of $13 million due almost entirely to the continued loss of copper-based Mass Market voice customers;

•Decreases in Fiber Broadband of $13 million driven by fewer Mass Market subscribers for our fiber services, primarily as a result of customers migrating to the Quantum Fiber services offered by Lumen (which bills customers for such services and pays us for use of our network in providing such services, as further described below);

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~~Total~~•Decreases ~~operating~~in ~~revenue~~Harvest ~~decreased~~of by $8728 million ~~and~~primarily ~~$314~~attributable ~~million,~~to ~~respectively,~~declines ~~for~~in ~~the~~legacy ~~three~~voice ~~and~~services ~~nine~~for ~~months~~Business ~~ended~~customers ~~September~~of ~~30,~~$16 ~~2024~~million ~~as compared to the three~~ and ~~nine~~a ~~months~~decrease ~~ended~~in ~~September~~private ~~30,~~line ~~2023.~~services ~~Within~~of ~~each~~$4 ~~product category, these decreases were primarily due to the following factors:~~million;

•Decreases in ~~Other~~Nurture ~~Broadband~~ of $455 million ~~and $132 million, respectively,~~ primarily due to ~~fewer~~declines ~~customers~~in ~~for~~Ethernet ~~our lower speed copper-based broadband~~ services;

•~~Decreases~~Grow inwas ~~Voice~~flat ~~and~~period ~~Other~~over ofperiod; ~~$16 million~~ and ~~$57 million, respectively, due almost entirely to the continued loss of copper-based voice customers;~~

•Decreases in ~~Fiber~~Affiliate ~~Broadband~~services of $2864 million ~~and~~primarily ~~$76~~due ~~million,~~to ~~respectively,~~a ~~driven~~$96 bymillion ~~fewer~~decrease ~~subscribers~~in ~~for~~direct ~~our~~legacy ~~fiber~~telecommunication services, ~~primarily~~provided asto aour ~~result~~affiliates ofand ~~migrations~~an to$8 ~~the~~million ~~Quantum~~decrease ~~Fiber~~in ~~services~~employee ~~offered~~shared byservices ~~Lumen~~expense ~~(which~~allocated ~~bills~~to ~~customers~~our ~~for~~affiliates, ~~such~~partially ~~services~~offset ~~and~~by ~~pays~~a us$40 ~~for~~million ~~use~~increase ofin ~~our~~fiber ~~network~~broadband inand ~~providing~~ethernet ~~such~~ services, asprovided ~~further~~to ~~described~~our ~~below);~~affiliates.

•Decreases in Harvest of $38 million and $101 million, respectively, primarily attributable to decrease in private line services of $11 million and $33 million, respectively, as well as declines in legacy voice services for business customers of $16 million and $38 million, respectively;

•Decreases in Nurture of $6 million and $27 million, respectively, primarily due to declines in Ethernet services; and

•Decreases in Grow of $8 million for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023, primarily due to declines in wavelengths services.

Affiliate services revenue increased $44 million and $87 million, respectively, for the three and nine months ended September 30, 2024 as compared to the three and nine months ended September 30, 2023 primarily due to $29 million and $53 million increase in fiber broadband and other direct telecommunication services provided to our affiliates, and $15 million and $34 million of additional employee shared services expense allocated to our affiliates.

Operating Expenses

	Three Months Ended September 30,			% Change
	2024		2023
	(Dollars in millions)
Cost of services and products (exclusive of depreciation and amortization)	$	389	416	(6)	%
Selling, general and administrative	111		118	(6)	%
Operating expenses - affiliates	182		225	(19)	%
Depreciation and amortization	183		207	(12)	%
Total operating expenses	$	865	966	(10)	%

The following table summarizes our consolidated operating expenses:

	Nine Months Ended September 30,				% Change
							Three Months Ended March 31,
	2024		2023
							2025		2024	% Change
	~~(Dollars in millions)~~			(Dollars in millions)
Cost of services and products (exclusive of depreciation and amortization)	$	~~1,132~~	~~1,207~~		~~(6)~~	%	$	354	370	(4)	%
Selling, general and administrative	~~357~~		~~362~~		~~(1)~~	%	104		128	(19)	%
Operating expenses - affiliates	~~575~~		~~600~~		~~(4)~~	%	185		212	(13)	%
Depreciation and amortization	~~557~~		~~607~~		~~(8)~~	%	191		187	2	%
Total operating expenses	$	~~2,621~~	~~2,776~~		~~(6)~~	%	$	834	897	(7)	%

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Cost of Services and Products (exclusive of depreciation and amortization)

Cost of services and products (exclusive of depreciation and amortization) decreased by $2716 million ~~and $75 million, respectively,~~ for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2024~~2025 as compared to the three ~~and nine~~ months ended ~~September~~March 3031, ~~2023~~2024. The decrease was primarily due to lower employee-related expenses of $3020 million ~~and $77 million~~.

Selling, General and Administrative

Selling, general and administrative expenses decreased by $724 million ~~and $5 million~~ for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2024~~2025 as compared to the three ~~and nine~~ months ended ~~September~~March 3031, ~~2023~~2024 due principally to (i) ~~decreases~~a decrease of $211 million ~~and $16 million, respectively,~~ in ~~marketing~~bad ~~and~~debt ~~advertising~~ expense, (ii) ~~decreases~~a decrease of $36 million ~~and~~in ~~$12~~employee ~~million,~~related ~~respectively~~expenses indue ~~property~~to ~~and~~lower ~~other taxes~~headcount, and (iii) ~~decreases~~a decrease of $73 million ~~and $15 million~~ in external commissions~~, respectively~~. ~~These decreases were partially offset by increases of $6 million and $45 million, respectively, in employee related expenses inclusive of severance costs.~~

Operating Expenses - Affiliates

Operating expenses - affiliates decreased by $4327 million ~~and $25 million, respectively,~~ for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2024~~2025 as compared to the three ~~and nine~~ months ended ~~September~~March 3031, ~~2023~~2024. The decrease ~~for the three and nine months ended September 30, 2024~~ was primarily due to (i) a decrease of $~~5 million and $~~17 million, ~~respectively,~~of innetwork ~~direct telecommunication~~ services ~~charged~~purchased tofrom ~~us by~~ affiliates, ~~and~~(ii) ~~a decrease of~~ $406 million ~~and~~of ~~$10~~lower ~~million~~allocated ~~for~~employee ~~the three~~ and ~~nine~~professional ~~months~~services ~~ended~~provided ~~September~~to ~~30,~~us ~~2024~~by asour ~~compared~~affiliates ~~to the three~~ and ~~nine~~(iii) ~~months~~a ~~ended~~decrease ~~September 30, 2023, respectively,~~ of ~~lower~~$4 ~~allocated~~million ~~employee~~in ~~and~~direct ~~professional~~telecommunication services ~~provided~~charged to us by our affiliates.

~~Depreciation and Amortization~~24

The following tables provide details of our depreciation and amortization expense:

	Three Months Ended September 30,			% Change
	2024		2023
	(Dollars in millions)
Depreciation	$	179	190	(6)	%
Amortization	4		17	(76)	%
Total depreciation and amortization	$	183	207	(12)	%

	Nine Months Ended September 30,			% Change
	2024		2023
	(Dollars in millions)
Depreciation	$	528	557	(5)	%
Amortization	29		50	(42)	%
Total depreciation and amortization	$	557	607	(8)	%

Depreciation expense decreased by $11 million and $29 million, respectively, for the three and nine months ended September 30, 2024 as compared to the three and nine months ended September 30, 2023 primarily due to a decrease of $19 million and $58 million, respectively, resulting from changes in the method of depreciation from the group method of depreciation to the straight line by individual asset method and a decrease of $6 million and $18 million, respectively, due to changes in depreciation lives of fiber assets as discussed in Note 1—Background and Summary of Significant Accounting Policies. These decreases were partially offset by an increase of $12 million and $46 million, respectively, due to net growth in depreciable assets.

Amortization expense decreased by $13 million and $21 million, respectively, for the three and nine months ended September 30, 2024 as compared to the three and nine months ended September 30, 2023 primarily due to a decrease of $11 million and $20 million, respectively, associated with changes in the method of amortization from the group method to straight line by individual asset method.

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Depreciation and Amortization

The following table provides details of our depreciation and amortization expense:


		Three Months Ended March 31,
		2025		2024	% Change
	(Dollars in millions)
Depreciation		$	183	174	5	%
Amortization		8		13	(38)	%
Total depreciation and amortization		$	191	187	2	%

Depreciation expense increased by $9 million for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024 due to net growth in depreciable assets.

Amortization expense decreased by $5 million for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024 due to a net decrease in amortizable assets.

Other Consolidated Results

The following ~~tables~~table ~~summarize~~summarizes our total other expense, net and income tax expense:

	Three Months Ended September 30,				% Change
					Three Months Ended March 31,
	2024		2023
							2025		2024	% Change
	~~(Dollars in millions)~~			(Dollars in millions)
Interest expense, net	$	(11)	(23)		(52)	%
Interest expense							$	(22)	(19)	16	%
Interest income—affiliate, net	8		5		60	%	13		2	nm
Other income, net	2		1		~~100~~	%	4		1	nm
Total other expense, net	$	~~(1)~~	~~(17)~~		~~(94)~~	%	$	(5)	(16)	(69)	%
Income tax expense	$	~~132~~	~~126~~		5	%	$	99	126	(21)	%

_______________________________________________________________________________

	Nine Months Ended September 30,			% Change
	2024		2023
	(Dollars in millions)
Interest expense, net	$	(44)	(75)	(41)	%
Interest income—affiliate, net	14		7	100	%
Other income, net	1		5	(80)	%
Total other expense, net	$	(29)	(63)	(54)	%
Income tax expense	$	398	426	(7)	%

_______________________________________________________________________________

nm Percentages greater than 200% and comparisons between positive and negative values or to/from zero values are considered not meaningful.

Interest Expense

Interest expense ~~decreased~~increased by $123 million ~~and $31 million, respectively,~~ for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2024~~2025 as compared to the three ~~and nine~~ months ended ~~September~~March 3031, ~~2023.~~2024 ~~These declines during such periods were~~ primarily due to ~~(i)~~lower ~~a decrease of approximately $222 million and $114 million, respectively, in average net outstanding debt and (ii) an increase of~~ capitalized interest of $79 million ~~and $23 million respectively. Additionally~~, ~~the~~which ~~average~~was interest rate decreased from 6.84% to 6.73% for the three months ended September 30, 2023 as compared to the three months ended September 30, 2024. For the nine months ended September 30, 2024, these decreases were partially offset by anthe ~~increase~~decrease in our average interest ~~rate~~ from 6.7879% to 6.7973% ~~for the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2024~~. ~~See Note 5—Long-Term Debt and Liquidity and Capital Resources below for additional information about our debt.~~

Interest Income - Affiliate, Net

Interest income - affiliate, net increased by $311 million ~~and $7 million, respectively,~~ for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2024~~2025 as compared to the three ~~and nine~~ months ended ~~September~~March 3031, ~~2023~~2024. The increase in interest income - affiliate, net was primarily due to a higher average receivable from affiliates ~~during each such period~~.

Income Tax Expense

For ~~both~~ the three ~~and nine~~ months ended ~~September~~March 3031, ~~2024~~2025, our effective tax ~~rates~~rate was 2625.68%. For the three ~~and nine~~ months ended ~~September~~March 3031, ~~2023~~2024, our effective tax rates ~~were~~was ~~27.0% and~~ 26.3%~~, respectively~~.

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Liquidity and Capital Resources

Overview of Sources and Uses of Cash

We are an ~~indirect~~indirectly wholly-owned subsidiary of Lumen Technologies, Inc. As such, factors relating to, or affecting, Lumen's liquidity and capital resources could have material impacts on us, including impacts on our credit ratings, our access to capital markets, and changes in the financial market's perception of us.

Our ultimate parent company, Lumen Technologies, Inc., has cash management arrangements or loan arrangements with a majority of its subsidiaries that include lines of credit, affiliate obligations, capital contributions and dividends. As part of these cash management or loan arrangements, affiliates provide lines of credit to certain other affiliates. Amounts outstanding under these lines of credit and intercompany obligations vary from time to time. Under these arrangements, the majority of our cash balance is advanced on a daily basis for centralized management by Lumen's service company affiliate. From time to time we may declare and pay dividends to QSC, our direct parent, sometimes in excess of our earnings to the extent permitted by applicable law, using cash owed to us under these advances, which has the net effect of reducing the amount of these advances. Our debt covenants do not currently limit the amount of dividends we can pay to QSC. Given ~~our~~the ~~cash~~amounts ~~management~~due ~~arrangement~~to ~~with~~us ~~our~~from ~~ultimate parent,~~ Lumen Technologies, Inc., under the above-described cash management or loan arrangements and the ~~resulting~~revolving ~~amounts~~promissory ~~due~~note todescribed usin ~~from~~Note ~~Lumen~~6—Affiliate ~~Technologies~~Transactions, ~~Inc.,~~ a significant component of our liquidity is dependent upon Lumen's ability to repay its ~~obligation~~obligations to us.

We anticipate that our future liquidity needs will be met through (i) our cash provided by our operating activities, (ii) amounts due to us from Lumen Technologies, (iii) our ability to refinance QC's debt securities to the extent permitted under applicable debt covenants, and (iv) capital contributions, advances, or loans from Lumen Technologies or its affiliates if and to the extent they have available funds or access to available funds that they are willing and able to contribute, advance or loan.

In August 2022, the Inflation Reduction Act was signed into law, which, among other things, implemented a corporate alternative minimum tax (“CAMT”) on adjusted financial statement income effective for tax periods occurring after December 31, 2022. The CAMT had no material impact on our financial results as of December 31, 2023. In addition, the Organization for Economic Co-operation and Development has issued Pillar Two model rules introducing a new global minimum tax of 15% intended to be effective on January 1, 2024. While the U.S. has not yet adopted the Pillar Two rules, various other governments around the world are enacting legislation, some of which are effective for tax periods after December 31, 2023. While the global minimum tax will increase our administrative and compliance burdens, we expect that it will have an immaterial impact on our financial statements for the tax period ending December 31, 2024.

Capital Expenditures

We incur capital expenditures on an ongoing basis in order to expand and improve our service offerings, enhance and modernize our networks, ~~fulfill our contractual obligations,~~ and compete effectively in our markets. Lumen Technologies and we evaluate ~~discretionary~~ capital expenditure projects based on a variety of factors, including expected strategic impacts (such as forecasted impact on revenue growth, productivity, expenses, service levels, and customer retention) and the expected return on investment. The amount of Lumen’s consolidated capital investment, and our portion thereof, is influenced by, among other things, demand for Lumen’s services and products, our network ~~and customer contract~~ requirements, cash flow generated by operating activities, cash required for debt ~~service~~services and other purposes, regulatory considerations (such asgovernmentally ~~government~~ mandated infrastructure buildout requirements), and the availability of requisite supplies, labor, and permits.

Our capital expenditures continue to be focused on enhancing network operating efficiencies, ~~developing~~supporting new ~~services~~service developments, and expanding our fiber network, including our Quantum Fiber buildout plan. For more information on our capital spending, see (i) "Cash Flow Activities—Investing" below and (ii) Item 1A of Part I of our Annual Report on Form 10-K for the year ended December 31, ~~2023~~2024.

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Debt and Other Financing Arrangements

On March 22, 2024, Lumen completed the TSA Transactions with a group of consenting debtholders representing over $15.0 billion of Lumen's outstanding consolidated long-term debt to, among other things, (i) extend maturities of the debt instruments of Lumen and Level 3 Financing, (ii) fund the repayment of all amounts owed under our term loans maturing in 2027 and (iii) provide for us and certain of our subsidiaries to guarantee Lumen’s obligations under its newly-established credit agreements and newly-issued superpriority senior notes. As of ~~September~~March 3031, ~~2024~~2025, we had ~~a face amount of~~ approximately $2.0 billion aggregate outstanding indebtedness (excluding finance leases, unamortized premiums, net and unamortized debt issuance costs)., $~~239~~237 million of ~~our~~which ~~outstanding debt~~ is due in the next 12 months (excluding finance lease obligations). For ~~more~~additional information ~~on the terms and impact of the TSA Transactions and our consolidated debt~~, see Note 54—Long-Term Debt ~~to the financial statements included in Item 1 of Part I of this report~~.

Subject to market conditions, and to the extent permitted under applicable debt covenants, Qwest Corporation may issue debt securities from time to time primarily to refinance a portion of ~~our~~its maturing debt. The availability, interest rate and other terms of any new borrowings will depend on the ratings assigned to Qwest Corporation by credit rating agencies, among other factors.

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As of the filing date of this report, the credit ratings for Qwest Corporation's senior unsecured debt were as follows:

Agency			Credit Ratings
Moody's Investors Service, Inc.			~~Caa3~~Caa2
Standard & Poor's			B-
Fitch Ratings			B+

~~Lumen's~~Our ~~and Qwest Corporation's~~ credit ratings are reviewed and adjusted from time to time by the rating agencies. Any future changes in the senior unsecured or secured debt ratings of us or our subsidiaries could impact our access to capital or borrowing costs. We cannot provide any assurances that we will be able to borrow additional funds on favorable terms, or at all. See Risk Factors—Financial Risks in Item 1A of Part I of our Annual Report on Form 10-K for the year ended December 31, ~~2023~~2024.

From time to time over the past couple of years, we have engaged in various debt, refinancings, redemptions, tender offers, exchange offers, open market purchases and other transactions designed principally to reduce our consolidated indebtedness, extend our debt maturities, improve our financial flexibility, or otherwise enhance our debt profile. Subject to market conditions, restrictions under our debt covenants, and other limitations, we expect to opportunistically pursue similar transactions in the future to the extent feasible. See Note 54—Long-Term Debt for additional information.

Note Receivable - Affiliate

On March 31, 2025, we entered into an unsecured revolving promissory note with our ultimate parent Lumen Technologies, under which Lumen Technologies is permitted to borrow up to $3.0 billion from us at an 8.3% 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 March 31, 2030, which will automatically renew on the maturity date for successive 12-month periods unless we elect otherwise. The facility has covenants and is subject to other limitations. As of March 31, 2025, we had $900 million due from Lumen Technologies under this promissory note. For more information, see Note 6—Affiliate Transactions.

Note Payable - Affiliate

We are permitted to borrow up to $2.0 billion from our parent Lumen Technologies under a revolving promissory note. OnAs ~~September~~of ~~30,~~March ~~2022~~31, ~~we repaid all amounts owed to Lumen Technologies under this promissory note. Since that time~~2025, weno ~~have~~amount ~~not~~was ~~owed~~due ~~any amounts~~ to Lumen Technologies under this promissory note.

Dividends

We periodically pay dividends to QSC, our direct parent company, which reduce our capital resources for debt repayments and other purposes. For additional information, see ~~(i)~~Note ~~our~~17—Stockholder's ~~consolidated~~Equity ~~statements~~in Item 8 of ~~cash~~Part ~~flows~~II ~~and~~of ~~stockholder's~~our ~~equity,~~Annual ~~(ii)~~Report ~~Note~~on Form 10~~—Dividends~~-K ~~and~~for ~~(iii)~~ the ~~discussion~~year ~~above~~ended ~~under~~December ~~the~~31, ~~heading "Overview"~~2024.

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Pension and Post-retirement Benefit Obligations

Lumen Technologies is subject to material obligations under its existing defined benefit pension plans and post-retirement benefit plans. At December 31, ~~2023~~2024, the accounting unfunded status of Lumen's qualified and non-qualified defined benefit pension plans and qualified post-retirement benefit plans was approximately $~~769~~645 million and approximately $1.97 billion, respectively. For additional information about Lumen's pension and post-retirement benefit arrangements, see "Critical Accounting Policies and Estimates—Pension and Post-Retirement Benefit Obligations" in Item 7 of Lumen's Annual Report on Form 10-K for the year ended December 31, ~~2023;~~2024 ~~also~~and see Note 1110—Employee Benefits to the consolidated financial statements in Item 8 of Part II of the same report.

A substantial portion of our active and retired employees participate in Lumen's qualified pension plan and post-retirement benefit plans. On December 31, 2014, the Qwest Communications International Inc. ("QCII") pension plan and a pension plan of an affiliate were merged into the CenturyLink Retirement Plan, which is now named the Lumen Combined Pension Plan. Our contributions are not segregated or restricted to pay amounts due to our employees and may be used to provide benefits to other employees of our affiliates. Prior to the pension plan merger, the above-noted employees participated in the QCII pension plan.

Benefits paid by Lumen's qualified pension plan are paid through a trust that holds all of the plan's assets. Based on current laws and circumstances, Lumen Technologies does not expect any contributions to be required for their qualified pension plan during ~~2024~~2025. The amount of required contributions to Lumen's qualified pension plan in ~~2025~~2026 and beyond will depend on a variety of factors, most of which are beyond ~~their~~Lumen's control, including earnings on plan investments, prevailing interest rates, demographic experience, changes in plan benefits and changes in funding laws and regulations. Lumen Technologies occasionally makes voluntary contributions in addition to required contributions and reserves the right to do so in the future. Lumen Technologies ~~made~~has aadvised ~~voluntary~~that ~~contribution~~it ofdoes ~~$170 million~~not expect to ~~the~~make ~~trust~~a ~~for~~voluntary ~~the~~contribution ~~Combined~~to ~~Pension~~the ~~Plan~~trust ~~during~~of the ~~third~~qualified ~~quarter~~pension ofplan ~~2024~~in 2025.

Substantially all of Lumen's post-retirement health care and life insurance benefits plans are unfunded and are paid by Lumen Technologies with available cash.

The affiliate obligations, net ~~shown~~ in Other ~~within~~ current liabilities and ~~noncurrent~~Other liabilities on our consolidated balance sheets, primarily ~~represent~~represents the cumulative allocation of expenses, net of payments, associated with QCII's pension plans and post-retirement benefits plans prior to the plan mergers. In 2015, we agreed to a plan to settle the outstanding pension and post-retirement affiliate obligations, net balance with QCII over a 30 year term. Under the plan, payments are scheduled to be made on a monthly basis. For the ~~nine~~three months ended ~~September~~March 3031, ~~2024~~2025, we made net settlement payments of $3912 million to QCII in accordance with the plan. Changes in the affiliate obligations, net are reflected in operating activities on our consolidated statements of cash flows. For the year ended ~~2024~~2025, we expect to make aggregate settlement payments of $5248 million to QCII under the plan.

For ~~2024~~2025, Lumen's expected annual long-term rate of return on pension plan assets is 6.5%. However, actual returns, ~~if any,~~ could be substantially different.

For additional information, see “Risk Factors—Financial Risks” in Item 1A of Part I of our Annual Report on Form 10-K for the year ended December 31, ~~2023~~2024.

Future Contractual Obligations

For information regarding our estimated future contractual obligations, see the MD&A discussion included in Item 7 of Part II of our Annual Report on Form 10-K for the year ended December 31, ~~2023~~2024.

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Federal Broadband Support Programs

InThe ~~early 2020, the~~ FCC's ~~created the~~ Rural Digital Opportunity Fund ("RDOF") program, aaims ~~federal~~to support ~~program designed to fund~~ broadband ~~deployment~~expansion in rural areas throughout America. ~~For~~As ~~the~~part ~~first~~of ~~phase~~Phase I of this program, ~~RDOF Phase I, the FCC awarded $6.4 billion in support payments to be paid in equal monthly installments over 10 years.~~ Lumen Technologies was awarded ~~RDOF~~ funding in several of the states in which we operate, and ~~began~~we ~~receiving~~receive ~~monthly~~an ~~support~~insignificant ~~payments~~amount ~~during the second quarter~~ of ~~2022,~~monthly ~~our~~support ~~share of which is not material~~payments. InFederal ~~the~~and ~~third~~state ~~quarter~~agencies ofcontinue ~~2024,~~to weimplement ~~relinquished~~broadband ~~rights~~initiatives to ~~develop~~enhance ~~certain~~broadband ~~RDOF~~access ~~census~~and ~~blocks in four states~~affordability, ~~which resulted in (i) a reduction of the anticipated RDOF Phase I support payments~~ and ~~(ii)~~we ~~the~~anticipate ~~expectation~~these ofprograms ~~payment~~may toincrease ~~the~~competition ~~Universal~~in ~~Service~~newly-served ~~Administrative Company~~areas. ~~These impacts are expected to be immaterial.~~

For additional information on these programs, see (i) Note 3—Revenue Recognition to our consolidated financial statements in Item 8 of Part II of our Annual Report on Form 10-K for the year ended December 31, 2023 (ii) "Business—Regulation of Our Business—Universal Service" in Item 1 of Part I of the same Annual Report (iii) "Risk Factors—Legal and Regulatory Risks" in Item 1A of Part I of the same Annual Report and (iv) the periodic reports filed by Lumen Technologies.28

~~Federal~~Table officials have proposed changes to current programs and laws that could impact us, including proposals designed to increase broadband access, increase competition among broadband providers, lower broadband costs and increase broadband regulation. In late 2021, the U.S. Congress enacted legislation that appropriated $65 billion to improve broadband affordability and access, primarily through federally funded state grants. As of ~~the~~Contents date of this report, various state and federal agencies are continuing to take steps to make this funding available to eligible applicants, including us. Although it remains premature to speculate on the ultimate impact of this legislation on us, we anticipate that the release of this funding would increase competition for broadband customers in newly-served areas.

OnFor ~~April~~additional ~~25,~~information ~~2024~~on these programs, see the ~~FCC~~following ~~adopted~~sections ~~“net~~within ~~neutrality”~~Lumen's ~~rules~~Annual ~~regulating~~Report ~~broadband~~on ~~internet~~Form 10-K ~~services~~for asthe ~~“telecommunications~~year ~~services”~~ended inDecember a31, ~~manner~~2024: ~~comparable~~(i) toNote ~~rules~~3—Revenue inRecognition ~~effect~~to ~~between~~our ~~2015~~consolidated ~~and~~financial ~~2018.~~statements Itin isItem ~~unclear~~8 ifof ~~currently~~Part ~~pending~~II, ~~legal~~(ii) ~~challenges~~"Business—Regulation of ~~these~~Our ~~rules~~Business—Universal ~~will~~Service" ~~succeed.~~in IfItem ~~the~~1 ~~rules~~of ~~withstand~~Part ~~these challenges~~I, ~~it is also unclear how the FCC will implement~~ and ~~enforce~~(iii) ~~them.~~"Risk WeFactors—Legal ~~remain committed to providing open~~ and ~~robust~~Regulatory ~~broadband~~Risks" ~~services~~in toItem ~~all~~1A ~~our customers regardless~~ of ~~the~~Part ~~applicable regulatory regime~~I. ~~Nonetheless~~Additionally, itrefer isto ~~possible~~the ~~that~~periodic ~~implementation~~reports offiled ~~these~~by ~~new~~Lumen ~~rules could impact our operational, legal and compliance costs~~Technologies.

Cash Flow Activities

The following table summarizes our consolidated cash flow activities for the ~~nine~~three months ended ~~September~~March 3031, ~~2024~~2025 and ~~September~~March 3031, ~~2023~~2024:

Nine Months Ended September 30,

$ Change

Three Months Ended March 31,

2024

2023

2025

2024

$ Change

(Dollars in millions)

Net cash provided by operating activities

~~1,646~~453

~~1,822~~471

(~~176~~18)

Net cash used in investing activities

(~~1,346~~439)

(~~1,820~~274)

~~(474)~~165

Net cash used in financing activities

~~(288)~~—

(2193)

~~286~~(193)

Operating Activities

Net cash provided by operating activities decreased by $~~176~~18 million for the ~~nine~~three months ended ~~September~~March 3031, ~~2024~~2025 as compared to the ~~nine~~three months ended ~~September~~March 3031, ~~2023~~2024 primarily due to lower net income adjusted for non-cash income and expenses. Cash provided by operating activities is subject to variability period over period as a result of timing differences, including with respect to collection of receivables and payments of interest expense, accounts payable and bonuses. For additional information about our operating results, see "Results of Operations" above.

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Investing Activities

Net cash used in investing activities ~~decreased~~increased by $~~474~~165 million for the ~~nine~~three months ended ~~September~~March 3031, ~~2024~~2025 as compared to the ~~nine~~three months ended ~~September~~March 3031, ~~2023~~2024 primarily due tothe aissuance ~~decrease~~of ina ~~advances~~note toreceivable ~~affiliates~~- affiliate, partially offset by aan ~~small~~ increase in advances to affiliates and a decrease in capital expenditures.

Financing Activities

Net cash ~~used~~provided inby financing activities ~~increased~~decreased by $~~286~~193 million for the ~~nine~~three months ended ~~September~~March 3031, ~~2024~~2025 as compared to the ~~nine~~three months ended ~~September~~March 3031, ~~2023~~2024 due ~~repayment of our term loan maturing in 2027 as well as an increase due~~ to the timing of repayments of advances from affiliates.

See Note 5—Long-Term Debt, for additional information on our outstanding debt securities and financing activities.

Other Matters

We are subject to various legal proceedings and other contingent liabilities that individually or in the aggregate could materially affect our financial condition, future results of operations or cash flows. See Note 97—Commitments, Contingencies and Other Items for additional information.

Our network includes some residual lead-sheathed copper cables installed years ago. ~~These~~that ~~lead-sheathed cables~~ constitute a small portion of our network. ~~Due~~Recent to media coverage ~~over the past year~~ of potential health and environmental risks associated with these cables, wehas ~~anticipate~~resulted ~~incurring~~in ~~certain~~regulatory ~~investigative~~inquiries ~~costs.~~and Welawsuits, ~~also~~and ~~may~~could ~~incur~~subject ~~other~~us ~~costs~~to ~~from~~legislative ~~related~~or ~~proceedings~~regulatory actions, ~~including~~removal ~~litigation~~costs, ~~regulatory~~compliance ~~initiatives~~costs, ~~and~~or ~~remediation~~penalties. As ~~September~~March 3031, ~~2024~~2025, we have not accrued for any such potential costs and will only accrue when such costs are probable and reasonably estimable. For additional information about related litigation and potential risks, see Note 97—Commitments, Contingencies and Other Items to our consolidated financial statements in Item 1 of Part I of this report, and the risk factor disclosures ~~incorporated~~included ~~by reference~~ herein under “Risk Factors” in Item 1A of Part II of this report.

Lumen Technologies is involved in several legal proceedings to which we are not a party that, if resolved against it, could have a material adverse effect on its business and financial condition. As a wholly owned subsidiary of Lumen Technologies, our business and financial condition could be similarly affected. You can find descriptions of these legal proceedings in Lumen's quarterly and annual reports filed with the SEC. Because we are not a party to any of the matters, we have not accrued any liabilities for these matters as of September 30, 2024.29

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Other Information

Lumen's and our website is www.lumen.com. We routinely post important investor information in the "Investor Relations" section of our website at ir.lumen.com. The information contained on, or that may be accessed through, our website is not part of this quarterly report. You may obtain free electronic copies of annual reports on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K filed by us or our ultimate controlling stockholder Lumen Technologies, Inc., and all amendments to those reports, in the "Investor Relations" section of our website (ir.lumen.com) under the heading "SEC Filings." These reports are available on our website as soon as reasonably practicable after they are electronically filed with the SEC.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Omitted pursuant to General Instruction H(2).

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934 (the “Exchange Act”)) designed to provide reasonable assurance that the information required to be disclosed by us in the reports we file or furnish under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. These include controls and procedures designed to ensure this information is accumulated and communicated to our senior ~~management~~leadership team, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. ~~Management~~Our management, with the participation of our President and Chief Executive Officer, Kate Johnson, and our Executive Vice President and Chief Financial Officer, Chris Stansbury, evaluated the effectiveness of our disclosure controls and procedures as of ~~September~~March 3031, ~~2024~~2025. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded our disclosure controls and procedures were effective, as of ~~September~~March 3031, ~~2024~~2025, in providing reasonable assurance the information required to be disclosed by us in this report was accumulated and communicated in the manner provided above.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) that occurred during the ~~third~~first quarter of ~~2024~~2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations of Internal Controls

The effectiveness of our or any system of disclosure controls and procedures is subject to certain limitations, including the exercise of judgment in designing, implementing, and evaluating the controls and procedures, the assumptions used in identifying the likelihood of future events and the inability to eliminate misconduct completely. As a result, there can be no assurance that our disclosure controls and procedures will detect all errors or fraud. By their nature, our or any system of disclosure controls and procedures can provide only reasonable assurance regarding management's control objectives.

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PART II—OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

~~The~~For information ~~contained~~regarding inlegal ~~Note~~proceedings ~~9—Commitments, Contingencies and Other Items included~~ in ~~Item 1~~which ofwe ~~Part I~~are ofinvolved, ~~this~~see ~~report is incorporated herein by reference. The ultimate outcome of the matters described in~~ Note ~~9 may differ materially from the outcomes anticipated~~7—Commitments, ~~estimated,~~Contingencies ~~projected~~and orOther ~~implied~~Items byto usour inconsolidated ~~certain~~financial ~~of our~~ statements ~~appearing~~ in ~~such Note, and proceedings currently viewed as immaterial by us may ultimately materially impact us. For more information, see “Risk Factors—Legal and Regulatory Risks” in~~ Item 1 1A of Part I of ~~our~~this ~~Annual Report on Form 10-K for the year ended December 31, 2023~~report. The

ultimate outcome of the matters described in Note 7 may differ materially from the outcomes anticipated,

estimated, projected, or implied by us in certain of our statements appearing in such Note, and proceedings currently viewed as not significant by us may ultimately materially impact us. For more information, see “Risk Factors—Legal and Regulatory Risks” in Item 1A of Part I of our Annual Report on Form 10-K for the year ended December 31, 2024.

ITEM 1A. RISK FACTORS

Our operations and financial results are subject to various risks and uncertainties, which could adversely affect our business, financial condition, orresults ~~future~~of ~~results~~operations, or prospects. We recommend that you carefully consider (i) the other information set forth elsewhere in this report and (ii) the risk factors discussed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, ~~2023~~2024, as further supplemented ~~by the disclosures included in Part II, Item 1A of our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2024.~~below:

37Changes in U.S. and foreign government administrative policy, including the imposition of, or increases in, tariffs, and changes to existing trade agreements, could have a material adverse effect on us.

As a result of changes to U.S. and foreign government administrative policy, there may be changes to existing trade agreements, the imposition of or significant increases in tariffs on goods imported into the U.S. and adverse responses by foreign governments to U.S. trade policies, among other possible changes. The U.S. administration has implemented or increased tariffs and announced it intends to implement or increase additional tariffs, and it remains unclear what the U.S. administration or foreign governments will or will not do with respect to tariffs or trade agreements and policies. A trade war; other governmental action related to tariffs or trade agreements; changes in U.S. social, political, regulatory, and economic conditions or in laws and policies governing foreign trade, manufacturing, development, and investment in the territories and countries where we currently develop and sell products; and any resulting negative sentiments toward the U.S. as a result of such changes, could have a material adverse effect on our business, results of operations or financial condition.

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ITEM 6. EXHIBITS

Exhibits identified in parentheses below are on file with the SEC and are incorporated herein by reference. All other exhibits are provided as part of this electronic submission.

ExhibitNumber

Description

Exhibit No.

Description

Filed or Furnished with this Form 10-Q

Incorporated by Reference(1)

31.1*

Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Form

Date(2)

31.2*

Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.1

Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1*

Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

31.2

Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.2*

Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.1

Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101*

Financial statements from the Quarterly Report on Form 10-Q of Qwest Corporation for the period ended September 30, 2024, formatted in Inline XBRL: (i) the Consolidated Statements of Operations, (ii) the Consolidated Balance Sheets, (iii) the Consolidated Statements of Cash Flows, (iv) the Consolidated Statements of Stockholder's Equity and (v) the Notes to the Consolidated Financial Statements.

32.2

Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

104*

Cover page formatted as Inline XBRL and contained in Exhibit 101.

101

Financial statements from the Quarterly Report on Form 10-Q of Qwest Corporation for the period ended March 31, 2025, formatted in Inline XBRL: (i) the Consolidated Statements of Operations, (ii) the Consolidated Balance Sheets, (iii) the Consolidated Statements of Cash Flows, (iv) the Consolidated Statements of Stockholder's Equity and (v) the Notes to the Consolidated Financial Statements.

104

Cover page formatted as Inline XBRL and contained in Exhibit 101.

_______________________________________________________________________________

* Exhibit(1)All documents listed below were filed ~~herewith~~by the registrant (File No. 001-03040).

38(2)Represents (i) the date appearing on the cover page of each applicable 10-K or 10-Q report and (ii) the date of filing with respect to all other reports.

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SIGNATURE

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on ~~November~~May 51, ~~2024~~2025.


			QWEST CORPORATION
			By:			/s/ Andrea Genschaw
						Andrea Genschaw Chief Accounting Officer and Controller (Principal Accounting Officer)

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