UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K


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

For the fiscal year ended December 31, ~~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. 001-35134

LEVEL 3 PARENT, LLC

(Exact name of registrant as specified in its charter)

Delaware		47-0210602	~~47-0210602~~
(State of Incorporation)			(I.R.S. EmployerIdentification No.)
(State or other jurisdiction ofincorporation or organization)		(I.R.S. EmployerIdentification No.)
931 14th Street
Denver,	Colorado		80202-2994
Denver, Colorado		80202-2994
(Address of principal executive offices)		(Zip Code)	~~(Zip Code)~~

(720) 888-1000

(Registrant’s telephone number,

including area code)

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: None

THE REGISTRANT, AAN INDIRECT WHOLLY OWNED SUBSIDIARY OF LUMEN TECHNOLOGIES, INC. ~~(FORMERLY NAMED CENTURYLINK~~, ~~INC.),~~ MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTIONS (I)(1) (a) AND (b) OF FORM 10-K AND IS THEREFORE FILING THIS FORM WITH REDUCED DISCLOSURE PURSUANT TO GENERAL INSTRUCTION (I)(2) OF FORM 10-K.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☒ No ☐

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 ☒ Although the registrant is no longer required to file reports under Section 13 or 15(d) of such Act, it has filed all such reports for the preceding 12 months.

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate website, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ 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 ~~and post~~ 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 has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

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 limited liability company interest in the registrant is held by an affiliate of the registrant. None of the interest is publicly traded and accordingly there is no aggregate market value of the voting and non-voting equity held by non-affiliates.

DOCUMENTS INCORPORATED BY REFERENCE: None.

Auditor Name: KPMG LLP Auditor Location: Denver, Colorado Auditor Firm ID: 185

TABLE OF CONTENTS

~~PART I~~	PART I
~~Special Note Regarding Forward-Looking Statements~~	3Special Note Regarding Forward-Looking Statements	3
Item 1. Business	6
Item 1.	Business	5
Item 1A. Risk Factors	14
Item 1A.	Risk Factors	13
Item 1B. Unresolved Staff Comments	28
Item 1B.	Unresolved Staff Comments	26
Item 1C. Cybersecurity	28
Item 1C.	Cybersecurity	26
Item 2. Properties	30
Item 2.	Properties	28
Item 3. Legal Proceedings	31
Item 3.	Legal Proceedings	29
Item 4. Mine Safety Disclosures	31
Item 4.	Mine Safety Disclosures	29
~~PART II~~	PART II
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	32
Item 5.	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	30
Item 6. [Reserved]	32
Item 6.	[Reserved]	30
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations	32
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	30
~~Overview~~	32Overview	30
~~Results of Operations~~	34Results of Operations	32
Critical Accounting Policies and Estimates	38
	Liquidity and Capital Resources	36
Liquidity and Capital Resources	41
	Critical Accounting Policies and Estimates	42
Market Risk	44
	Quantitative and Qualitative Disclosures About Market Risk	45
Item 7A. Quantitative and Qualitative Disclosures About Market Risk	45
Item 8.	Consolidated Financial Statements and Supplementary Data	46
Item 8. Consolidated Financial Statements and Supplementary Data	46
	Consolidated Statements of Operations	48
Consolidated Statements of Operations	48
	Consolidated Statements of Comprehensive Loss	49
Consolidated Statements of Comprehensive Loss	49
	Consolidated Balance Sheets	50
Consolidated Balance Sheets	50
	Consolidated Statements of Cash Flows	51
Consolidated Statements of Cash Flows	51
	Consolidated Statements of Member's (Deficit) Equity	52
Consolidated Statements of Member's Equity	52
	Notes to Consolidated Financial Statements	53
Notes to Consolidated Financial Statements	53
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	96
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	92
Item 9A.	Controls and Procedures	96
Item 9A. Controls and Procedures	92
Item 9B.	Other Information	97
Item 9B. Other Information	93
Item 9C.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	97
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	93
	PART III
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	98
Item 10. Directors, Executive Officers and Corporate Governance	94
Item 11.	Executive Compensation	98
Item 11. Executive Compensation	94
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	98
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	94
Item 13.	Certain Relationships and Related Transactions, and Director Independence	98
Item 13. Certain Relationships and Related Transactions, and Director Independence	94
Item 14.	Principal Accountant Fees and Services	99
Item 14. Principal Accounting Fees and Services	94
	PART IV
PART IV
Item 15.	Exhibits and Financial Statements Schedules	100
Item 15. Exhibits and Financial Statements Schedules	95
Item 16.	Form 10-K Summary	109
Item 16. Summary of Business and Financial Information	102
Signatures		110
Signatures	103

Unless the context requires otherwise, references in this ~~report~~Annual Report on Form 10-K to "Level 3," “we,” “us,” "its," the "Company" and "our" refer to Level 3 Parent, LLC and its predecessor Level 3 Communications, Inc., and their respective consolidated subsidiaries. References to (i) "Lumen Technologies" or "Lumen" refer to our ultimate parent company, Lumen Technologies, Inc. and its consolidated subsidiaries, (ii) “Level 3 Financing” refer to our finance subsidiary, Level 3 Financing, Inc., and (iii) “Qwest” refer to our affiliate Qwest Corporation, unless the context otherwise ~~reports~~requires.

Part I

Special Note Regarding Forward-Looking Statements

This report and other documents filed by us under the federal securities ~~law~~laws 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~~within ~~"forward-looking"~~the ~~statements~~meaning ~~are~~of ~~defined~~the ~~by,~~Private ~~and~~Securities ~~are~~Litigation ~~subject~~Reform toAct ~~the~~of ~~"safe~~1995. ~~harbor"~~These ~~protections~~forward-looking ~~under,~~statements ~~the~~involve ~~federal~~substantial ~~securities~~risks ~~laws~~and uncertainties. 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, Private Connectivity FabricSM ("PCF") buildouts, transformation plans, ~~participation in~~ deleveraging plans, modernization and simplification initiatives, and other initiatives, including benefits or costs associated therewith;

•statements about our liquidity, profitability, profit margins, tax ~~position~~positions, 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, impacts from regulatory and legislative developments, investment and expenditure plans, business strategies, distributions, 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 and are based on current expectations only, (ii) are inherently speculative, and (iii) are subject to a number of risks and uncertainties, many of which are beyond our control. 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 "Risk Factors" section of this Annual Report on Form 10-K, other portions of this report or other of our filings with the U.S. Securities and Exchange Commission (the "SEC").

•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, replacing aging or obsolete plant and equipment, strengthening our relationships with customers and attaining projected cost savings;

~~•our~~Additional ~~ability~~factors or risks that we currently deem immaterial, that are not presently known to ~~successfully~~us, ~~and~~or ~~timely~~that ~~monetize~~arise in the future could also cause our ~~network~~actual ~~related~~results ~~assets~~to ~~through~~differ ~~leases~~materially from our expected results. Given these uncertainties, ~~commercial~~investors ~~service~~are ~~arrangements~~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 ~~similar~~revise ~~transactions~~any ~~(including~~forward-looking statements for any reason, whether as ~~part~~a result of ~~our~~new ~~Private~~information, ~~Connectivity~~future ~~FabricSM~~events ~~solutions)~~or developments, ~~including~~changed ~~the~~circumstances, ~~possibility~~or ~~that~~otherwise. ~~the~~Furthermore, ~~benefits~~any information about our intentions contained in any of ~~these~~our ~~transactions~~forward-looking ~~may~~statements bereflects ~~less~~our ~~than~~intentions ~~anticipated,~~as ~~that~~of the ~~costs~~date ~~thereof~~of ~~may~~such beforward-looking ~~more~~statement, ~~than~~and ~~anticipated~~is orbased ~~that~~upon, weamong ~~may~~other bethings, ~~unable~~our toassessment ~~satisfy~~of ~~any~~regulatory, technological, industry, competitive, economic, and market conditions as of ~~any~~ such ~~transactions~~date. inWe amay ~~timely~~change ~~manner~~our intentions, strategies or plans (including our distribution or other capital allocation plans) at ~~all;~~any time and without notice, based upon any changes in such factors or otherwise.

•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, broadband deployment, data protection, privacy and net neutrality;

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

•our ability to effectively retain and hire key personnel;

•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 intelligence services;

•our ability to enhance our growth products and manage the decline of our older products, including by maintaining the quality and profitability of our existing offerings, introducing profitable new offerings on a timely and cost-effective basis, and transitioning customers from our mature products to our newer offerings;

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

•our ability to successfully and timely realize the anticipated benefits from our 2022 and 2023 divestitures, and our 2024 debt modification and extinguishment transactions described elsewhere herein;

•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 impact of any future material acquisitions or divestitures that we may transact;

•the negative impact of increases in the costs of Lumen's pension, healthcare and post-employment 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;

•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;

•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, 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;

•our ability to use our net operating loss carryforwards in the amounts projected;

•the effects of changes in accounting policies, practices or assumptions, including changes that could potentially require additional future impairment charges;

•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 distribution or other capital allocation plans) at any time and without notice, based upon any changes in such factors or otherwise.

ITEM 1. BUSINESS

Business Overview ~~and Purpose~~

We are a leading digital networking services company, ~~with~~empowering ~~the~~enterprise ~~goal~~businesses ofto fuel growth in a multi-cloud, AI-first marketplace by connecting people, data, and applications quickly, securely, and effortlessly. We are unleashing the world's digital potential by providing a broad array of integrated products and services to our ~~domestic and global business~~ customers. We operate one of the world'’s most interconnected communications networks. Our platform empowers our customers to swiftly adjust digital programs to meet immediate demands, create efficiencies, accelerate market access, and reduce costs, which allows our customers to rapidly evolve their IT programs to address dynamic changes. Our specific products and services are detailed below under the heading ~~"Operations -~~ “Products and Services."”

Our Network

Our fiber optic long-haul network throughout North America and Asia Pacific connects to metropolitan fiber networks that we operate. We believe our and Lumen's secure global platform plays a central role in facilitating communications worldwide.

WeReporting ~~were incorporated under the laws of the State of Delaware in 1941. Our principal executive offices are located at 931 14th Street, Denver, Colorado 80202 and our telephone number is (720) 888-1000.~~Segment

OnFor ~~August 1,~~the ~~2022,~~reasons ~~certain~~noted ofin ~~our~~Note ~~affiliates~~1 ~~sold~~— ~~our~~Background ~~Latin~~and ~~American~~Summary ~~business. On November 1, 2023, certain~~ of ~~our~~Significant ~~affiliates~~Accounting ~~sold~~Policies ~~our business conducted~~ in ~~Europe,~~Item ~~Middle East and Africa ("EMEA")~~8, towe ~~Colt~~have ~~Technology~~determined ~~Services~~that ~~Group~~we ~~Limited,~~have aone ~~portfolio~~reportable ~~company of Fidelity Investments, for pre-tax cash proceeds of $1~~segment.7 billion after certain closing adjustments and transaction costs. This consideration is further subject to other post-closing adjustments and indemnities set forth in the purchase agreement, as amended and supplemented to date.

~~See~~Our ~~Note 2—Divestitures of the Latin American and EMEA Businesses to our consolidated financial statements in Item 8 of Part II of this report.~~Stakeholders

~~For~~We abelieve ~~discussion~~that ofregular ~~certain~~communications ~~risks~~with ~~applicable to~~ our ~~business,~~stakeholders ~~see~~is ~~"Risk~~a ~~Factors"~~vital incomponent ~~Item 1A~~ of ~~Part~~our ~~I of this report~~success. ~~The~~Our ~~summary~~"North ~~financial~~Star" ~~information~~strategy infocuses ~~this~~on ~~Item~~the 1operating ~~should~~principles beof ~~read~~teamwork, ~~in conjunction with~~trust, and istransparency ~~qualified~~and byinfuses ~~reference~~clarity ~~to,~~into ~~our~~the ~~consolidated~~communications ~~financial~~we ~~statements~~have ~~and~~with ~~notes~~all ~~thereto in Item 8~~ of ~~Part~~our IIstakeholders, ofincluding ~~this~~our ~~report~~investors, ~~and~~employees, ~~"Management's~~customers, ~~Discussion~~vendors, ~~and~~partners, ~~Analysis of Financial Condition~~ and ~~Results~~our oflocal ~~Operations" in Item 7 of Part II of this report~~communities.

~~Financial~~Employees ~~Highlights~~and Human Capital Resources

~~The~~To ~~following~~drive ~~table~~growth ~~summarizes~~and ~~the~~success, ~~results~~we’ve ofstrengthened our ~~consolidated~~senior ~~operations:~~leadership team, modernized our business, and energized our culture. We strive to attract, develop, and retain a workforce that is inspired by strong leadership, engaged in meaningful work, and motivated by career growth opportunities. Our goal is to foster a culture where teamwork, trust, and transparency empower thriving employees to achieve both individual and collective success. We aim to attract broad talent to develop innovative ideas that transform industries worldwide.

	Years Ended December 31,
	2024		2023(1)	2022(1)
	(Dollars in millions)
Operating revenue	$	6,496	7,037	7,493
Operating expenses	6,435		8,662	11,741
Operating income (loss)	$	61	(1,625)	(4,248)
Net loss	$	(276)	(2,004)	(4,793)

As of December 31, 2025, we employed approximately 7,600 employees.

~~(1)During~~Sales ~~2023~~ and 2022, we recorded non-cash, non-tax-deductible goodwill impairment charges of $2.0 billion and $4.6 billion, respectively. For additional information, see Note 3—Goodwill, Customer Relationships and Other Intangible Assets to our consolidated financial statements in Item 8 of Part II of this report.Marketing

WeOur ~~estimate~~business ~~that~~customers ~~during~~range ~~2024,~~from ~~2023,~~small business offices to the world’s largest global enterprise customers. Our enterprise sales and ~~2022,~~marketing ~~approximately~~approach ~~3%,~~focuses ~~10%,~~on delivering advanced technology and ~~17%,~~network ~~respectively,~~solutions ofthat ~~our~~address ~~consolidated~~complex ~~revenue~~customer ~~was~~needs. ~~derived~~We ~~from~~strive ~~providing~~to ~~telecommunications~~make core network services compatible with digital tools and promote sales by leveraging call center teams and channel partners. To meet the needs of diverse customers, ~~colocation~~we offer both stand-alone and ~~hosting~~bundled services, ~~outside~~including ~~the~~our ~~United~~PCF ~~States~~solutions, designed to provide a complete offering of integrated services.

6 Direct sales representatives generally market our business services to in-house IT departments or other highly-sophisticated customers with deep technological experience. We also market our products and services through inbound call centers, telemarketing, and third parties such as telecommunications agents, system integrators, value-added resellers, and other telecommunications firms. Marketing support includes digital advertising, events, television advertising, website promotions, and public relations. Either we or Lumen maintain local offices in most major and secondary markets within the U.S. and many of the primary markets within other countries in which we provide services.

~~The following table summarizes certain selected financial information from our consolidated balance sheets:~~5

	As of December 31,
	2024		2023
	(Dollars in millions)
Total assets	$	16,426	17,253
Total long-term debt (1)	9,665		8,983
Total member's equity	196		3,616

Customer Concentration

~~(1)For~~A ~~additional~~relatively ~~information~~small onnumber ~~our~~of ~~long-term~~customers ~~debt,~~account ~~see~~for ~~Note~~a ~~7—Long-Term~~significant ~~Debt~~percentage toof our ~~consolidated~~revenue. ~~financial~~Our ~~statements~~top inten ~~Item~~customers 8accounted offor ~~Part~~approximately II21%, of20% ~~this~~and ~~report.~~18% ~~For~~of ~~information on~~ our total ~~obligations,~~operating ~~see~~revenue ~~"Management's~~for ~~Discussion~~the ~~and~~years ~~Analysis~~ended ofDecember ~~Financial~~31, ~~Condition~~2025, ~~and~~2024 ~~Results of Operations—Liquidity~~ and ~~Capital~~2023, ~~Resources—Future Contractual Obligations" in Item 7 of Part II of this report~~respectively.

The summary financial information appearing above should be read in conjunction with, and is qualified by reference to, our consolidated financial statements and notes thereto in Item 8 of Part II of this report and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7 of Part II of this report.

Operations

Products and Services

While most of our customized interactions with customers involve multiple integrated technologies and services, we ~~organize~~structure our ~~products~~offerings ~~and services~~ to reflect product life cycles and our go -to -market ~~approach~~strategy. AtAs of December 31, ~~2024~~2025, we categorized our products and services revenue among the following categories:

Grow: Includes products and services that we anticipate will grow, including:

•Colocation.: We provide different options for organizations’ data center needs. Our data center services range from dedicated hosting and cloud services to more complex managed solutions, including disaster recovery, business continuity, applications management support, and security services to manage mission critical applications;

•Dark Fiber and Conduit.: We control an extensive array of unlit optical fiber known as “dark fiber” which has been laid but not yet been equipped with the equipment necessary for it to transmit data. We provide access to this unlit optical fiber to customers who are interested in building their networks with this high-bandwidth, highly secure optical technology. We also provide access to conduit, which are ducts installed underground to house and protect fiber optic cables. Additionally, we provide professional services to engineer these networks, and in some cases, manage them for customers;

•Edge Cloud Services.: We provide access to both public and private cloud solutions that allow our customers to optimize cost and performance by offloading workloads. Lumen’s cloud access products are designed to leverage our network edge to provide low-latency secure services for our customers. Additionally, we provide cloud orchestration tools that allow customers to shift work between cloud environments dynamically;

•Internet Protocol ("IP").: Our IP services provide global internet access over a high performance, diverse network;

•Managed Security Services.: We provide enterprise security solutions that help our customers secure networks, mitigate malicious attacks, and identify potential security threats. These services include DDoS mitigation, remote and premise-based firewalls, professional consulting and management services, and threat intelligence services;

•Unified Communications and Collaboration ("UC&C").: We provide access to various unified communications platforms. This offering includes both individual, license-based service models, and more robust enterprise-wide options that transform a customer’s ~~inbound~~various ~~and~~communication ~~outbound~~tools ~~calling~~into a single platform; and

7•Optical Services: We deliver high bandwidth optical wavelength networks to customers requiring an end-to-end solution with ethernet technology for a scalable amount of bandwidth connecting sites or providing high-speed access to cloud computing resources.

~~•Optical~~Nurture: ~~Services.~~Includes Weour ~~deliver~~more ~~high~~mature ~~bandwidth~~offerings, ~~optical~~such wavelength networks to customers requiring an end-to-end solution with ethernet technology for a scalable amount of bandwidth connecting sites or providing high-speed access to cloud computing resources.as:

~~Nurture~~•Ethernet: We deliver a robust array of networking services built on ethernet technology. Ethernet services include point-to-point and multi-point equipment configurations that facilitate data transmissions across metropolitan areas and larger enterprise-class wide area networks. Our ethernet technology is also used by wireless service providers for data transmission via our fiber-optic cables connected to their towers; and

•Ethernet. We deliver a robust array of networking services built on ethernet technology. Ethernet services include point-to-point and multi-point equipment configurations that facilitate data transmissions across metropolitan areas and larger enterprise-class wide area networks. Our ethernet technology is also used by wireless service providers for data transmission via our fiber-optic cables connected to their towers; and6

•VPN Data Networks.: Leveraging our extensive fiber-optic network, we create private networks tailored to our customers’ needs. These technologies enable enterprises, ~~and~~ government entities, and service providers to streamline multiple networks into a ~~single,~~ cost-effective solution that simplifies the transmission of voice, video, and data over a single secure network.

Harvest: Includes our legacy services managed for cash flow, including:

•Voice Services.: We offer our customers a complete portfolio of traditional Time Division Multiplexing voice services including primary rate ~~interference~~interface service, local inbound service, switched one-plus, toll free, long distance, and international services;

•Private Line.: We deliver private line services, a direct circuit or channel specifically dedicated for connecting two or more organizational sites. Private line service offers a high-speed, secure solution for frequent transmission of large amounts of data between sites, including wireless backhaul transmissions; and

•Other Legacy Services.: We continue to provide certain services based on older platforms to support our customers as they transition to newer technology. These services include Synchronous Optical Network ("SONET") based ethernet, legacy data hosting services, and conferencing services.

Other: Includes various other products and services, including:

•IT Solutions.: We craft technology solutions for our customers and often manage these solutions on an ongoing basis. These services frequently enhance equipment or networks owned, acquired, or controlled by the customer and often include our consulting or software development services.

Affiliate Services: Includes products and services provided to affiliates:

•Affiliate Services.: We provide our affiliates certain communication services that we also provide to external customers. Please see our products and services listed above for further description of these services.

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

Our Network

~~Our~~We ~~and~~deliver ~~Lumen's network, through which we provide~~ most of our products and services through our network, together with Lumen's, which is primarily ~~consists~~built ofon fiber-optic cables and ~~other~~ supporting equipment. WePortions ~~operate part~~ of our network ~~with~~use leased assets, and amuch ~~substantial portion~~ of ~~our~~the equipment ~~with~~uses licensed software.

We created our communications network by constructing our own assets and through a combination of purchasing other companies and purchasing or leasing facilities from others. We designed our network to provide communications services that employ and take advantage of rapidly improving underlying optical, Internet Protocol, computing and storage technologies.Connectivity

8We created our communications network by constructing our own assets and through a combination of purchasing other companies and purchasing or leasing facilities from others. We designed our network to provide communications services that employ, and take advantage of, rapidly improving underlying optical, Internet Protocol, computing, and storage technologies.

As discussed in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Item 7 ~~of Part II of this report~~ and Note 2 —~~Divestitures~~ ofDivestiture ~~the Latin American and EMEA Businesses to our consolidated financial statements~~ in Item 8 ~~of Part II of this report~~, we sold portions of our network during ~~2022 and~~ 2023.

WeStrategic ~~and~~Investments ~~Lumen view our network as one of our most critical assets. We~~ and Lumen have devoted, and plan to continue to devote, substantial resources to (i) simplify and modernize our network and legacy systems (ii) retire aging or obsolete systems and (iii) expand our network to address demand for enhanced or new products.Modernization

~~Although~~We weand or Lumen ~~own~~view ~~most of~~ our network, weas ~~lease~~one ~~a substantial portion~~ of our ~~core~~most ~~fiber~~critical ~~network~~assets. ~~from~~We ~~several~~and ~~other~~Lumen ~~communication~~have ~~companies~~devoted ~~under~~— ~~arrangements~~and ~~that~~ will ~~periodically~~continue ~~need~~ to bedevote ~~renewed~~— orsignificant ~~replaced~~resources to ~~support~~maintain, ~~our~~modernize, ~~current~~and ~~network~~expand ~~operations~~it. Key efforts include:

As•simplifying ~~a critical infrastructure provider, we~~ and ~~our~~modernizing ~~customers are a constant target of cyber-attacks from a wide range of intruders, including advanced persistent threat actors. From time to time in the ordinary course of~~ our ~~business, we experience security incidents and disruption in our services. We develop and maintain systems and programs designed to protect against cyber-attacks and~~ network ~~outages. The development, maintenance~~ and ~~operation~~legacy ~~of these~~ systems ~~and programs is costly and requires ongoing monitoring and updating as technologies change and efforts to bypass security measures become more sophisticated and evolve rapidly.~~;

~~For~~•retiring ~~additional~~aging ~~information~~and ~~regarding~~obsolete ~~risks~~infrastructure ~~relating~~and ~~to our~~ systems,; ~~network assets, network operations, capital expenditure requirements~~ and ~~reliance upon third parties, see "Risk Factors" in Item 1A of Part I of this report.~~

•expanding our network to meet growing demand for enhanced and new products.

Leased Network Assets

Although we or Lumen own most of our network, we lease a substantial portion of our fiber network from several other communication companies under arrangements that will periodically need to be renewed or replaced to support our current network operations.

Cybersecurity and Network Resilience

As a critical infrastructure provider, we and our customers face ongoing cyber threats, including advanced persistent threat actors. We experience occasional security incidents and service disruptions in the ordinary course of business and maintain robust systems to mitigate these risks. The development, maintenance, and operation of these systems and programs require significant investments and continuous updates to address evolving threats.

For additional information regarding our oversight of cybersecurity matters, see "Cybersecurity" in Item 1C, and regarding risks relating to our systems, network assets, network operations, capital expenditure requirements, and reliance upon third parties, see "Risk Factors" in Item 1A.

Competition

We compete in a dynamic and highly competitive market inwhere ~~which~~ demand for high-speed, secure data ~~service~~services continues to grow. WeOur ~~expect~~competitors ~~continued~~include ~~intense~~global ~~competition from a wide variety of sources under these evolving market conditions. In addition to competition from large international~~ communications providers, weas ~~are~~well ~~facing~~as ~~competition from additional sources, including~~ systems integrators, cloud service providers, software networking companies, infrastructure companies, cable companies, device providers, resellers, and smaller niche providers. Intense competition is expected to continue across a wide range of industry participants amid the evolving market landscape.

Our ability to compete hinges upon effectively enhancing and better integrating our existing products, introducing new products on a timely and cost-effective basis, meeting changing customer needs, providing high-quality information security to build customer confidence and combat cyber-attacks, extending our core technology into new applications and anticipating emerging standards, business models, software delivery methods and other technological changes. Depending on the applicable market and requested services, competition can be intense, especially if one or more competitors in the market have network assets better suited to the customer’s needs, offer faster transmission speeds, charge lower prices, or have a longer history of providing service in the market.Success

WeOur ~~compete~~ability to ~~provide~~compete ~~services to business customers based on a variety of factors, including the comprehensiveness~~ and ~~reliability~~succeed ofin ~~our~~this ~~network,~~competitive ~~our~~environment ~~data~~depends ~~transmission~~on: speeds, price, the latency of our available network services, the scope of our integrated offerings, the reach and peering capacity of our IP network, digital ordering capabilities, ease of access and use, billing simplicity and customer service. We continue to experience pricing pressure for several of our products and services due to a wide array of large communications companies and systems integrators providing high-speed fiber services to enterprise and wholesale business customers and other companies that market slower-speed non-fiber services typically at lower prices to more price-sensitive customers.

~~Additional~~•enhancing ~~information~~and ~~about~~integrating ~~competitive~~existing ~~pressures is located under the heading “Risk Factors—Business Risks” in Item 1A of Part I of this report.~~products;

9•introducing new offerings quickly and cost-effectively;

~~Sales~~•meeting ~~and~~changing ~~Marketing~~customer needs;

~~Our~~•delivering ~~enterprise~~robust ~~sales~~information ~~and~~security ~~marketing approach revolves around solving complex customer problems with advanced technology and network solutions - striving~~ to ~~make~~build ~~core~~trust ~~networks services compatible with digital tools. We also rely on our call center personnel~~ and amitigate ~~variety~~cyber of channel partners to promote sales of services that meet the needs of our customers. To meet the needs of different customers, our offerings include both stand-alone services and bundled services, such as our Private Connectivity FabricSM (“PCF”) solutions, designed to provide a complete offering of integrated services.threats;

~~Our~~•extending ~~business customers range from small business offices to the world’s largest global enterprises customers. Our marketing plans include marketing~~ our ~~products~~core ~~and~~technologies ~~services~~into ~~primarily~~new ~~through~~applications; ~~direct sales representatives, inbound call centers, telemarketing~~ and third parties, including telecommunications agents, system integrators, value-added resellers and other telecommunications firms. We support our distribution through digital advertising, events, television advertising, website promotions and public relations. Either we or Lumen maintain local offices in most major and secondary markets within the U.S. and many of the primary markets of the other countries in which we provide services.

We•anticipating ~~generally~~industry ~~market~~and ~~our~~technology ~~business services to members of in-house IT departments or other highly-sophisticated customers with deep technological experience~~shifts. ~~These individuals typically satisfy their IT requirements by contracting with us or a rapidly evolving group of competitors, or by deploying in-house solutions.~~

~~Research~~Competitive pressures are particularly strong when rivals have network assets better suited to customer needs, ~~Development~~faster &transmission ~~Intellectual~~speeds, ~~Property~~lower prices, or a longer track record in the market.

As of December 31, 2024, we had approximately 1,000 patents and patent applications in the U.S. and other countries. We have also received licenses to use patents held by others. We plan to continue to file new patent applications as we enhance and develop products and services, and we plan to continue to seek opportunities to expand our patent portfolio through strategic acquisitions and licensing.Business

We compete for business customers based on factors such as:

•network reliability and comprehensive coverage;

•data transmission speed and latency;

•pricing and billing simplicity;

•integrated service offerings;

•IP network reach and peering capacity;

•digital ordering capabilities and ease of use; and

•customer service quality.

Additional information about competitive pressures is located under the heading “Risk Factors — Business Risks” in Item 1A.

Research, Development and Intellectual Property

As of December 31, 2025, we held approximately 1,040 patents and patent applications in the U.S. and other countries. We have also received licenses to use patents held by others. We plan to continue to file new patent applications as we enhance and develop products and services, and we plan to continue to seek opportunities to expand our patent portfolio through strategic acquisitions and licensing.

In addition to our patent rights, we have rights in various trade names, trademarks, copyrights and other intellectual property that we use to conduct our business. Our services often use the intellectual property of others, including licensed software. We also occasionally license our intellectual property to others as we deem appropriate.

For information on various litigation risks associated with owning and using intellectual property rights, see “Risk Factors — Business Risks” in Item 1A ~~of Part I of this report,~~ and Note 16 — Commitments, Contingencies and Other Items ~~to our consolidated financial statements~~ in Item 8 ~~of Part II of this report~~.

Regulation of Our Business

Our domestic operations are regulated by the Federal Communications Commission (the “"FCC”"), ~~by various~~ state regulatory commissions, and occasionally by local agencies. Our non-domestic operations are regulated by supranational groups (such as the European Union, or ("EU"), national agencies and, frequently, state, provincial, or local bodies. ~~Generally~~In most areas where we offer regulated services, we must obtain and maintain operating licenses from these bodies ~~in most areas where we offer regulated services~~.

Changes in the ~~composition~~leadership ~~and~~or ~~leadership~~structure of ~~the~~these ~~FCC, state~~ regulatory ~~commissions~~bodies ~~and~~can ~~other~~significantly ~~agencies~~affect ~~that regulate~~ our ~~business could have significant impacts on our~~ revenue, expenses, competitive position ~~and~~or prospects. ~~Changes~~Because insuch ~~the~~changes ~~composition and leadership of these agencies~~ are often difficult to predict, ~~which~~long-term ~~makes future~~ planning ~~more~~is ~~difficult~~challenging.

~~The~~This ~~following~~section ~~description~~highlights ~~discusses~~certain ~~some of the major~~ regulations affecting our operations, ~~but~~though ~~others~~additional regulations could have a ~~substantial~~significant impact ~~on us as well~~. For additional information, see “Risk Factors” in Item 1A ~~of Part 1 of this report~~.

Federal Regulation of Domestic Operations

~~General~~We are subject to extensive regulation by the FCC and state commissions, including obligations under the Universal Service Fund programs. The FCC regulates our interstate services, including business data service charges for wholesale network transmission and intercarrier compensation — such as interstate access charges billed to other communications companies for originating and terminating interstate phone calls and voice services, such as compliance with rules designed to protect consumers against unlawful automated calls or robocalls.

The FCC ~~regulates~~also ~~the interstate services we provide, including the business data service charges we bill for wholesale network transmission and intercarrier compensation. Additionally, the FCC~~ regulates several aspects of our business related to international communications services, privacy, public safety, and network infrastructure, including (i) our access to and use of local telephone numbers, (ii) our provision of emergency 911 services and (iii) our use or removal (potentially on a reimbursable basis) of equipment produced by certain vendors deemed to cause potential national security risks. We could incur substantial penalties if we fail to comply with the FCC's applicable regulations.:

~~Many~~•our ofaccess ~~the FCC’s regulations adopted in recent years remain subject~~ to ~~judicial review~~ and ~~additional~~use ~~rulemakings, thus increasing the difficulty~~ of ~~determining~~telephone ~~the ultimate impact of these changes on us and our competitors.~~numbers;

•our provision of emergency 911 services; and

•our use or removal (potentially on a reimbursable basis) of equipment from vendors deemed to cause potential national security risks.

Failure to comply with FCC regulations can result in significant penalties. Many recently adopted FCC regulations remain under judicial review or subject to further rule-making, increasing the difficulty of determining the ultimate impact of these changes on us and our competitors.

Other Federal Regulation

Federal officials have proposed changes to existing programs and laws that could impact our business, including proposals designed to increase broadband access, promote competition among broadband providers, and lower broadband costs. 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 date of this report, state and federal agencies continue working to distribute these funds to eligible applicants. We anticipate that the release of this funding may intensify competition for broadband customers.

Broadband Regulation

InThe ~~February~~regulatory ~~2015,~~environment ~~the~~for ~~FCC adopted an order regulating~~ broadband internet access ~~services~~service (“BIAS”) ashas ashifted ~~Title~~significantly II utility service under the Communications Act of 1934. In December 2017, the FCC voted to repeal this order. In May 2024, the FCC adopted a new order regulating BIAS as a Title II utility service, but a federal appeals court vacated this order in ~~January~~recent ~~2025. Several states have proposed~~years, ~~implemented~~creating oruncertainty ~~enacted~~about ~~laws~~future ~~or orders focused on state-specific Internet service regulation~~requirements. InKey ~~addition, certain members of Congress and various consumer interest groups have advocated in favor of classifying BIAS as a Title II utility service. These~~ developments make it difficult to predict the future degree of regulation of BIAS. Any imposition of heightened regulation of our Internet operations could potentially hamper our ability to operate our data networks efficiently, restrict our ability to implement network management practices necessary to ensure quality service, increase the cost of operating, maintaining and upgrading our network, and otherwise negatively impact our current operations.include:

•FCC classified BIAS as a common carrier service under Title II of the Communications Act of 1934 and imposed net neutrality rules in 2015;

•FCC repealed the Title II classification and most of the net neutrality mandates in 2017;

•FCC adopted a new order reclassifying BIAS as a Title II utility service and re-imposing net neutrality rules in 2024; and

•a federal appeals court vacated the FCC's 2024 order, concluding that Congress did not authorize Title II regulations of BIAS in 2025.

Several states have proposed or enacted laws or orders focused on state-specific Internet service regulation. Certain members of Congress and consumer interest groups continue to advocate for classifying BIAS as a Title II utility service.

These developments create uncertainty regarding the future regulatory landscape for BIAS. Any increase in regulation could:

•hinder our ability to operate our data networks efficiently;

•restrict necessary network management practices to ensure quality service; and

•increase the cost of operating, maintaining, and upgrading our network.

Collectively, these developments and potential regulatory changes could materially impact our operations and increase compliance costs.

State Regulation of Domestic Operations

State regulatory agencies have jurisdiction when our facilities and services are used to provide intrastate telecommunications services. Level 3 provides competitive services that are generally ~~not~~ subject to less state regulation tothan ~~the same degree as~~ incumbent local exchange carriers ("~~ILECs~~ILEC"s).

Data Privacy Laws and Regulations

~~Various~~We are subject to numerous foreign, federal, and state laws ~~govern~~governing ~~our~~the storage, maintenance, and use of customer data, including ~~a wide range of~~ consumer protection, data protection, privacy, intellectual property, and other similar laws. ~~Data~~These ~~privacy~~requirements ~~regulations~~ are complex and vary widely across jurisdictions. As a company providing global services, we must comply with various jurisdictional data privacy regulations, including the GDPR in the EU and similar laws adopted by various other jurisdictions in certain of our domestic and overseas markets. Domestically, the number of state privacy laws continues to increase. The application, interpretation and enforcement of these laws are often uncertain, and may be interpreted and applied inconsistently from jurisdiction to jurisdiction. These regulations require careful handling of personal and customer data and could have a significant impact on our business, especially if we violate any of those regulations.

International Regulations

As a global service provider, we must comply with various jurisdictional data privacy regulations, including the EU’s General Data Protection Regulation (“GDPR”) and similar data privacy laws adopted in other jurisdictions of our international markets.

Domestic Regulations

Domestically, the number of state privacy laws continues to increase. The application, interpretation, and enforcement of these laws are often uncertain, and may be interpreted and applied inconsistently from jurisdiction to jurisdiction. These regulations require careful handling of personal and customer data and could have a significant impact on our business, especially if we violate any of those regulations.

Anti-Bribery and Corruption Regulations

As a ~~provider of~~ global ~~services~~service provider, we ~~must~~are ~~comply~~subject ~~with~~to complex foreign and U.S. laws ~~and regulations~~ governing business ethics and practices, ~~such~~including as the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act, and other local laws prohibiting corrupt payments to ~~governmental~~government officials, ~~and~~as well as anti-competition regulations. WeTo ~~have~~mitigate risk, we maintain compliance policies, programs, and training designed to prevent non-compliance with ~~such~~these anti-corruption ~~regulations~~and infair ~~the~~competition ~~U.S.~~laws ~~and~~across ~~other~~all jurisdictions where we operate.

Regulation of International Operations

Our subsidiaries operating outside of the U.S. are subject to various regulations in the markets where ~~service~~we isprovide ~~provided~~services. The scope ofand ~~regulation~~nature ~~varies~~of ~~from~~these ~~country~~regulations tovary by country. ~~The~~and ~~communications regulatory regimes~~ in ~~certain~~some ofjurisdictions, ~~our~~communications ~~non-domestic~~regulatory ~~markets~~frameworks are instill ~~the~~developing ~~process of development~~ and do not fully address many issues, including the pricing of services. Our overseas operations are also subject to various other domestic or non-domestic laws or regulations, including those governing:

~~Our overseas operations are also subject to various other domestic or non-domestic laws or regulations, including various laws or regulations governing (i)~~ •exports and imports of various goods or technologies~~, (ii) certain sanctioned business activities, and (iii) competition.~~;

•certain sanctioned business activities;

•competition; and

•cross-border data flows.

These requirements collectively shape our compliance obligations and influence how we conduct international operations.

Other Regulations

Our networks and properties are subject to numerous federal, state, and local laws and regulations, including ~~laws~~those ~~and regulations~~ governing the use, storage, and disposal of hazardous materials, the release of pollutants into the environment, and the remediation of contamination. Our contingent liabilities under these laws are further described in Note 16 — Commitments, Contingencies and Other Items. ~~Certain~~in ~~federal~~Item ~~and state agencies, including attorneys general, monitor and exercise oversight related to consumer protection issues~~8. We are also subject to codes that regulate our trenching and construction operations or that require us to obtain permits, licenses or franchises to operate. Such regulations are enacted by municipalities, counties, state, federal or other regional governmental bodies, and can vary widely from jurisdiction to jurisdiction as a result. Such regulations may also require us to pay substantial fees or impact our network buildout initiatives.

Certain federal and state agencies, including attorneys general, monitor and exercise oversight related to consumer protection issues. We are also subject to codes that regulate our trenching and construction activities that require us to obtain permits, licenses, or franchises to operate. These regulations are enacted by municipalities, counties, states, federal government, or other regional governmental bodies and can vary widely across jurisdictions. In some cases, such regulations may require us to pay substantial fees or impose conditions that affect our network buildout initiatives.

Seasonality

Overall, our business is not materially impacted by seasonality. Our network-related operating expenses are, however, generally higher in the second and third quarters of the year. From time to time, weather-related problems have resulted in increased costs to repair our network and respond to service calls in some of our markets. The amount and timing of these costs are subject to the weather patterns of any given year, but have generally been highest during the third quarter and have been related to damage from severe storms, including hurricanes, tropical storms, and tornadoes.

Employees

As of December 31, 2024, we had approximately 7,700 employees.

Additional Information

For further information on regulatory, technological and competitive factors that could impact our revenue, see "Risk Factors" under Item 1A below. For more information on the financial contributions of our various services, see "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Item 7 of Part II of this report. For additional information about us and our ultimate parent, Lumen Technologies, please refer to the periodic reports filed by Lumen Technologies with the SEC, which can be accessed by visiting the websites listed below under “Website Access and Important Investor Information.”

Website Access and Important Investor Information

Lumen's and our website is www.lumen.com., Weand we routinely post important investor information in the "“Investor” ~~Relations"~~ section of our website at ir.lumen.com. ~~The~~Our ~~information~~principal ~~contained~~executive ~~on,~~offices orand ~~that~~telephone ~~may~~number beare ~~accessed~~listed ~~through,~~on ~~our~~the ~~website~~cover ispage ~~not part~~ of this report ~~or any other periodic reports that we file with the SEC~~. ~~Any~~Information ~~references~~on to our website inis ~~this report or any other periodic reports that we file with the SEC are~~ provided for convenience only, and ~~are~~is not ~~intended to make any of our website information a~~ part of this or ~~such~~any other reports. You may obtain free electronic copies of our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K filed by us or our ultimate parent, Lumen Technologies, (i) in the "Investor Relations" section of our website (ir.lumen.com) under the heading "FINANCIALS" and subheading "SEC ~~Filings" or (ii) on the SEC's website at www~~filing.~~sec.gov. From time to time we also use our website to webcast our earnings calls and certain of our meetings with investors or other members of the investment community.~~

SEC Filings

Free electronic copies of our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements, and other information filed with the SEC are available on our website under “Investors” → “Financials” → “SEC Filings” or at https://www.sec.gov. Reports for certain subsidiaries are also available.

Available Information

We typically disclose material non-public information by disseminating press releases, making public filings with the SEC, or disclosing information during publicly accessible meetings or conference calls. Nonetheless, from time to time we have used, and intend to continue to use, our investor relations website (www.ir.lumen.com) and the following social media accounts to augment our disclosures:

•https://www.twitter.com/lumentechco;

•https://www.linkedin.com/company/lumentechnologies;

•https://www.facebook.com/lumentechnologies; and

•https://www.youtube.com/lumentechnologies

Please note that this list may be updated from time to time. Investors should subscribe to these social media accounts and our investor alerts, in addition to following our press releases, SEC filings, public conference calls and webcasts.

In connection with filing this report, our chief executive officer and chief financial officer made the certifications regarding our financial disclosures required under the Sarbanes-Oxley Act of 2002, and its related regulations.

As a large complex organization, we are from time to time subject to litigation, disputes, governmental or internal investigations, consent decrees, service outages, security breaches or other adverse events. We typically publicly disclose these occurrences (and their ultimate outcomes) only when we determine these disclosures to be material to investors or otherwise required by applicable law.

We typically disclose material non-public information by disseminating press releases, making public filings with the SEC, or disclosing information during publicly accessible meetings or conference calls. Nonetheless, from time to time we have used, and intend to continue to use, our website and social media accounts to augment our disclosures.

Although at various times, we answer questions raised by securities analysts, it is against our policy to disclose to them selectively any material non-public information or other confidential information. Accordingly, you should not assume that we agree with any statement or report issued by an analyst with respect to our past or projected performance. To the extent that reports issued by securities analysts contain any projections, forecasts or opinions, such reports are not our responsibility.

Unless otherwise indicated, information contained in this report and other documents filed by us under the federal securities laws concerning our views and expectations regarding industry conditions are based on estimates made by us using data from industry sources and making assumptions based on our industry knowledge and experience. You should be aware that we have not independently verified data from industry or other third-party sources and cannot guarantee its accuracy or completeness.

ITEM 1A. RISK FACTORS

The following discussion identifies material factors that could (i) materially and adversely affect our business, financial condition, results of operations or prospects or (ii) cause our actual results to differ materially from our anticipated results, projections or other expectations. The following information should be read in conjunction with the other portions of this annual report, including “Special Note Regarding Forward-Looking Statements”, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7 and our consolidated financial statements and related notes in Item 8. All references to "Notes" in this Item 1A of Part I refer to the Notes to Consolidated Financial Statements included in Item 8 of Part II of this report. Please note the following discussion is not intended to comprehensively list all risks or uncertainties faced by us. Our operations or actual results could also be similarly impacted by additional risks and uncertainties that are not currently known to us, that we currently deem to be immaterial, that arise in the future or that are not specific to us. In addition, certain of the risks described below apply only to a part ~~or segment~~ of our business.

Business Risks

Challenges with integrating, or modernizing, ~~our~~and ~~existing~~digitally ~~applications~~transforming ~~and~~our systems could ~~harm~~adversely affect our ~~performance~~business and financial results.

To ~~attain~~achieve our operational and strategic goals and ~~our~~ projected cost savings, we ~~need~~must to integrate, ~~simplify, upgrade,~~ and modernize ~~our existing applications and systems, including many~~ legacy systems ~~from past acquisitions. This process will require us to~~, ~~among other things, timely~~ retire aging or obsolete ~~systems~~platforms, deploy a master data management ~~platform~~, and ~~integrate~~complete ~~various~~our ~~legacy~~digital ITtransformation ~~systems~~to ~~into~~deliver a ~~new,~~global ~~simplified~~digital ~~structure.~~platform ~~These~~with ~~modernization~~automated ~~efforts~~offerings ~~will~~and digital self-service. These initiatives require efficient ~~allocation~~resource ~~of resources~~allocation, ~~development~~advanced ~~capacity~~project management, ~~greater~~adoption ~~use~~ of ~~artificial~~emerging ~~intelligence~~technologies (“including AI”) ~~and other emerging technologies~~, access to subject-matter experts, ~~development of a sustainable~~ and ~~resilient~~cross-functional ~~operating model, advanced project management capabilities and successful~~ collaboration ~~among personnel with differing expertise~~. We cannot assure you these efforts will be successful. Any failure to timely accomplish these initiatives may negatively affect our (i) ability to deliver services to our customers at required speed and scale, (ii) ability to realize anticipated efficiencies and attain our operational cost reduction goals, (iii) network stability, (iv) ability to timely repair infrastructure and respond to service outages or (v) ability to meet regulatory, legal or contractual obligations.

We ~~may~~cannot ~~not~~assure you these efforts will be ~~able~~completed on time, be within budget, or achieve intended benefits. Failure to ~~create~~execute ~~the~~could ~~global~~disrupt ~~digital~~service ~~experience~~delivery, ~~expected~~delay byrepairs, reduce anticipated efficiencies, destabilize our network, and hinder compliance with regulatory or contractual obligations. These outcomes could result in customer loss, inability to attract new customers, and failure to meet financial objectives, any of which could materially and adversely affect our business and results of operations.

~~Our~~We ~~customers~~may ~~expect~~not usrealize to create and maintain a global digital platform, including (i) automation and simplification of our offerings and (ii) digital self-service access to our products, services and customer support. To do so, we must timely and successfully complete the ~~digital~~anticipated ~~transformation~~benefits of our ~~operations~~strategic ~~that~~focus ison ~~currently~~PCF ~~underway~~solutions. Effective digital transformation is a complex, dynamic process requiring efficient allocation and prioritization of resources, simplification of our product portfolio, faster product deployments, retirement of obsolete systems, migration of data and corresponding transformations and our workforce and systems. We cannot assure you we will be able to timely effect the successful digital transformation necessary to develop or deliver a global digital experience expected by our customers. If we are unable to do so, we could lose existing customers or fail to attract new ones, either of which could prevent us from attaining our financial goals.

We ~~may~~have ~~not~~prioritized ~~realize~~sales ~~the~~from our PCF solutions in recent periods. PCF agreements involve delivery obligations and performance conditions that can affect timing and amounts of revenue recognition. Construction delays or cost overruns — from weather, supply chain, labor, permitting or other issues — could raise costs. Shifts in data center connectivity demand could reduce or even eliminate future PCF profitability. If anticipated benefits ofdo not materialize or costs increase, our ~~strategic~~financial ~~focus~~results onmay ~~selling~~be ~~PCF~~adversely ~~solutions~~impacted.

~~During~~Our ~~the~~attempts ~~second~~to ~~half~~capitalize of 2024, Lumen announced that it and its subsidiaries, including us, had recently sold several billion dollars of new PCF solutions. Full payment for certain deals involving construction of new routes depends on ~~fulfilling~~emerging ~~certain~~market ~~delivery~~opportunities ~~obligations~~— orespecially ~~other~~AI ~~performance~~— ~~conditions, and revenue under our PCF agreements~~ may befall ~~less than anticipated~~short. Our costs under these agreements may be greater than anticipated due to construction delays or cost overruns as a result of weather, supply chain, labor, permitting, or other unforeseen issues. If demand for data center connectivity declines or customer needs or preferences change for any other reason, future demand for, and the profitability of, our PCF solutions could decline or cease.

14Growth in AI products and solutions, along with other recent industry changes have fueled demand for higher transmission speeds, greater bandwidth, lower latency and more advanced networking services. We are building a digital networking services ecosystem designed to deliver compelling products and services, including PCF solutions, that address market demand. Achieving this vision requires continuous system enhancements, seamless integration, and the ability to meet evolving customer needs amid rapid technological change and intense competition. If AI-related demand proves weaker, slower, or materially different from our assumptions in strategic plans or guidance, we risk misallocating resources and failing to meet growth objectives.

Our attempts to capitalize on emerging market opportunities may not be as successful as envisioned.

Growth in AI products and other recent industry changes have fueled demand for higher transmission speeds, greater bandwidth, lower latency and more advanced networking services. In response, we are endeavoring to build a digital networking services ecosystem that enables us to offer attractive products and services (including PCF solutions) that fulfill this market demand. But, as indicated by other of the disclosures in this Item 1A, our success will be dependent on improving and integrating our systems and meeting evolving customer demands in a highly competitive industry experiencing rapid advances in technology. For these reasons and others, our attempts to capitalize on emerging market opportunities may not be as successful as we currently envision.

In connection with establishing our strategies, we have assumed that the continued development of AI will continue to drive robust demand for our products and services, which subjects us to the risk of misallocating our resources if AI-related demand fails to meet current expectations.

WeThe ~~operate~~use of AI in aninternal ~~intensely~~operations ~~competitive~~may ~~industry~~create ~~and~~governance, ~~existing~~operational, cybersecurity, privacy, and ~~future~~regulatory ~~competitive~~risks ~~pressures~~that could ~~harm~~adversely ~~our~~affect ~~performance~~the Company's business and results of operations.

Each of our offerings faces increasingly intense competition from a wide range of sources under evolving market conditions that have increased the number and variety of companies that compete with us. Some of our current and potential competitors: (i) offer products or services that are substitutes for our traditional network services, (ii) offer a more comprehensive range of communications products and services, (iii) operate systems that are newer, more integrated or more advanced, which enable them to provision services faster and more efficiently, (iv) have greater financial, provisioning, technical, engineering, research, development, marketing, customer relations or other resources, (v) conduct operations or raise capital at a lower cost, (vi) are subject to less regulation, (vii) have stronger brand names, (viii) have deeper or more long-standing relationships with key customers, or (ix) have larger operations than ours, any of which may enable them to compete more successfully for customers, strategic partners and acquisitions. In recent years, competitive pressures have commoditized pricing for some of our products and services and lowered market prices for many of our other products and services. Continued competitive pressures will likely place further downward pressure on market pricing.13

~~Our~~We ~~ability~~operate toin ~~successfully~~an ~~compete~~intensely ~~could~~competitive beindustry, ~~hampered~~and ifexisting ~~we fail to timely develop~~ and ~~market~~future ~~innovative~~competitive ~~technology~~pressures ~~solutions~~could ~~that~~harm ~~address~~our ~~changing customer demands~~performance.

~~The~~Each ~~technology~~of ~~and~~our ~~communications~~offerings ~~industry~~face ~~has~~intense ~~been~~competition ~~and~~from ~~continues~~a tobroad berange ~~impacted~~of byproviders ~~significant~~under ~~technological~~evolving ~~changes,~~market ~~which~~conditions ~~are~~that ~~increasing~~have ~~demand~~increased ~~for~~both ~~digitally-integrated~~the ~~products~~number and ~~enabling~~diversity ~~an increasing variety~~ of ~~companies to compete with us~~competitors. Many of these technological changes are (i) displacing or reducing demand for certain of our services, (ii) enabling the development of competitive products or services, (iii) enabling customers to reduce or bypass use of our networks or (iv) reducing our profit margins. For example, our competitors ~~may overbuild in our markets and roll out high speed connectivity products.~~ :

~~Increasingly,~~•offer ~~customers are demanding higher transmission speeds and more technologically advanced~~ products ~~that suit their evolving needs, including traditional~~ and ~~generative AI~~ services. Asthat wesubstitute ~~note~~for ~~below, several of~~ our ~~competitors~~legacy ~~have~~wireline ~~dedicated substantially more resources to developing such advanced services. If we fail to develop competitive AI services~~offerings, ~~our~~including ~~business~~wireless broadband and ~~financial~~voice ~~performance~~or ~~could~~non-voice becommunication ~~adversely impacted.~~ services;

To•provide ~~remain~~a ~~competitive,~~more wecomprehensive ~~will~~portfolio ~~need~~of tocommunications ~~accurately predict and respond to changes in technology, to continue developing and offering~~ products and services attractive to our customers, to migrate our customers from legacy to newer products and services, to timely provision our products and services, to maintain and expand our network to enable it to support customer demands for significantly greater transmission capacity and speeds, and to discontinue outdated products and services on a cost-effective basis. Our ability to do so could be restricted by various factors, including limitations of our existing network, technology, capital or personnel. If we fail at that, we could fail to retain customers or attract new ones.;

•operate newer, more integrated, or more advanced systems that enable faster and more efficient service delivery;

•possess greater financial, technical, engineering, research, development, marketing, and customer relationship resources;

•conduct operations or raise capital at lower costs;

•are subject to fewer regulatory constraints or costs;

•benefit from stronger brand recognition and deeper, long-standing customer relationships; or

•maintain larger-scale operations.

These advantages may allow competitors to compete more successfully for customers, strategic partners, and acquisition opportunities. In recent years, competitive pressures have commoditized pricing for certain products and reduced market prices for many others. We expect these pressures to continue, which could place further downward pressure on pricing and adversely impact our profitability.

Our ability to compete could be diminished if we fail to innovate and deliver advanced solutions timely.

The technology and communications industry is undergoing rapid technological change, increasing demand for digitally-integrated products and enabling an increasing variety of competitors to enter the market. These changes are reducing demand for certain services, enabling the development of competitive alternatives, allowing customers to bypass our networks, and compressing profit margins. Customers increasingly expect higher transmission speeds and advanced offerings, including traditional and generative AI services. Several competitors have committed substantial resources to developing these advanced services.

To remain competitive, we must:

•accurately predict and respond to technological developments;

•develop and offer attractive products and services that meet evolving customer needs;

•migrate customers from legacy offerings to newer products and services;

•provision our products and services quickly and reliably;

•maintain and expand our network to support significantly greater transmission capacity and speeds; and

•retire outdated services cost-effectively.

Our ability to achieve these objectives may be constrained by limitations in our network, technology, capital resources, or personnel. Failure to successfully execute these initiatives could result in resource misallocation and an inability to retain existing customers or attract new ones, which may adversely affect our business, financial condition, and results of operations.

Talent constraints and evolving work models could significantly impede our ability to attract, develop and retain qualified personnel and may impair execution of our transformation and strategic initiatives.

As we continue transforming to primarily serve Business customers and deliver advanced products, we face intense competition for skilled leaders and employees and may be unable to attract and retain the technical, operational, sales, and managerial expertise needed to execute our strategy. Competitors with greater resources may offer compensation and benefits exceeding ours, and remote work arrangements have broadened the pool of employers competing for talent. The relatively low trading price of Lumen's common stock has reduced the perceived value of Lumen's equity-based compensation programs, further hindering our ability to recruit and retain critical talent. Moreover, our significant remote and hybrid workforce could impair collaboration, innovation, and productivity, and weaken the collegial relationships that support our corporate culture. These factors could materially and adversely affect our ability to execute our strategic plans and achieve our business objectives.

Declining revenues and financial uncertainty could adversely affect our business.

Primarily due to competitive and technological changes discussed throughout this report, we have experienced prolonged systemic declines in several of our legacy services, including local voice, long-distance voice, network access, and private line revenues. More recently, pricing pressure and other factors have contributed to revenue declines across a broader array of products and services. Although we have implemented operating and strategic plans to address these challenges, we may not succeed in achieving future revenue growth within projected time frames, or at all. Many of our newer offerings generate lower margins and may displace higher-margin legacy services, further impacting profitability.

These revenue declines or failure to hit our revenue growth goals, combined with elevated debt levels and Lumen's relatively low stock trading price, may create uncertainty about our future prospects and ability to meet obligations. Concerns about our financial condition may adversely affect employee morale and customers, vendors, landlords, lenders, and other third parties may be reluctant to transact with us or impose unfavorable terms if they believe our future is uncertain. Lumen's relatively low stock price may also restrict our ability to raise capital through equity offerings and reduce analyst coverage. Any of these factors could materially and adversely affect our business, financial condition, results of operations, and prospects.

Damage to our reputation or brands could have a material adverse effect on our business.

The Lumen and Level 3 brand names, together with our corporate reputation, are critical assets that support our ability to attract and retain customers and employees. These assets are vulnerable to significant harm from events such as customer or competitor disputes, cyber-attacks, service outages, data breaches, internal control deficiencies, performance failures, compliance violations, employee misconduct, government investigations, or litigation. Similar incidents involving competitors could also generate negative publicity for the entire industry, indirectly impacting our business.

Our reputation may further be impaired by criticism from customers, vendors, employees, advocacy groups, regulators, investors, the media, social media influencers, or others regarding our services, operations, or public positions. For example, unfavorable trends in customer experience scores — such as Net Promoter Score (“NPS”) or Customer Health Score (“CHS”) — relative to competitors could adversely affect us. Additionally, the risk of reputational harm associated with unauthorized disclosure of confidential information or customer data may increase if employees misuse social networking platforms or emerging technologies, including generative AI tools. Negative or inaccurate information about Lumen, even if based on rumor or misunderstanding, could also cause reputational harm.

Damage to our reputation or brands may be difficult, costly, and time-consuming to remediate. Any such harm could diminish the value and effectiveness of our brands, reduce investor confidence, and erode customer and employee loyalty, ultimately having a material adverse impact on the value of our securities.

AsWe wecould ~~continue to transform our organization, we may~~ be ~~unable~~materially toimpacted ~~attract,~~by ~~develop and retain leaders and employees with the right skill sets and technical expertise~~cyber-attacks.

~~Lumen~~As ~~and~~a ~~Level~~critical 3infrastructure ~~may~~provider, beour ~~unable~~operations torely ~~attract~~heavily ~~and~~on ~~retain~~a ~~skilled~~broad ~~and~~range ~~motivated~~of ~~leaders and employees who possess the technical~~hardware, ~~development~~software, ~~operational,~~networks ~~sales or managerial expertise to execute our plans for transformation, innovation~~ and ~~strategic~~other ~~growth.~~products ~~We operate in a highly competitive~~ and ~~expanding~~services ~~industry,~~that ~~where~~are ~~competition~~owned ~~for highly skilled employees has grown increasingly intense~~ and ~~competitors~~managed ~~have~~by ~~targeted~~us ~~hiring~~or ~~our~~by ~~employees.~~third ~~Further~~parties, ~~the~~including ~~prevalence~~systems ofused ~~remote~~to ~~working~~transmit ~~arrangements~~and ~~has~~store ~~expanded~~large ~~the~~volumes ~~pool~~ of ~~companies~~sensitive ~~that~~data ~~can~~(collectively, ~~compete~~“IT ~~for our employees and employee candidates~~systems”). We ~~believe~~and ~~some of~~ our ~~competitors~~third-party ~~with~~partners ~~greater resources~~ and ~~fewer~~customers ~~cost~~are ~~constraints~~frequent ~~than~~targets usof ~~have~~increasingly ~~from~~sophisticated ~~time~~cyber-attacks, toincluding ~~time~~distributed ~~been~~denial-of-service, ~~able~~ransomware, tomalware, ~~offer~~viruses, ~~compensation~~credential orharvesting, ~~benefits~~ man-in-the-middle, ~~excess~~software ofvulnerability ~~what~~exploitation, weand ~~are~~social ~~able to offer~~engineering. ~~These~~Our ~~risks~~efforts to ~~attracting~~implement ~~and~~sound ~~retaining~~information ~~key~~security ~~personnel~~and ~~may~~business ~~have~~continuity ~~been~~programs ~~exacerbated~~cannot byensure the ~~impacts~~integrity of ~~the~~our ~~low~~systems ~~trading~~and ~~price~~successful ofattacks ~~Lumen's~~could ~~common~~materially ~~stock,~~disrupt ~~which~~operations, ascompromise ~~discussed below~~data, ~~has~~damage ~~diminished~~our ~~Lumen's~~reputation, ~~ability~~trigger inregulatory ~~2024~~investigations toor ~~offer~~litigation, ~~competitive~~or ~~equity~~result ~~incentive~~in ~~compensation~~significant tocosts. ~~our~~We ~~key~~have ~~employees.~~acquired ~~Our~~and ~~failure~~will continue to ~~successfully~~acquire ~~attract~~companies ~~and~~that ~~retain~~may ~~key~~have ~~personnel~~cybersecurity ~~could~~vulnerabilities ~~materially~~or ~~adversely~~unsophisticated ~~impact~~controls, ~~our~~which ~~business~~exposes orus ~~financial~~to ~~performance~~significant risk.

~~Over~~We ~~half of our employees work fully from home,~~ and acertain ~~substantial portion~~ of ~~the~~our ~~remainder~~third-party ~~work~~providers ~~partly~~have ~~from~~previously ~~home~~experienced ~~under~~cyberattacks ~~"hybrid"~~and ~~work~~security ~~schedules~~incidents. ~~These~~Future ~~work~~attacks ~~arrangements~~could ~~may~~have ~~impair~~a ~~our~~material ~~ability~~adverse toeffect ~~maintain~~on our ~~collaborative~~business, ~~and innovative culture~~operations, ~~and~~or ~~may~~financial ~~lower the productivity and collegiality of our workforce~~results.

~~Uncertainty~~As ~~regarding~~further ~~our~~described ~~future~~in ~~prospects~~Item ~~could~~1C ~~adversely~~“Cybersecurity” ~~impact~~of ~~our~~this ~~ability~~annual toreport, ~~maintain~~cyber-attacks ~~satisfactory~~originate ~~relations~~from ~~with~~multiple ~~our~~sources ~~employees~~and manifest in diverse ways, ~~customers~~potentially exposing personally identifiable information, ~~vendors~~customer data, or protected health information, subjecting us to stringent domestic and ~~others~~foreign data protection laws. These threats may also arise from failure or intrusions of unaffiliated third-party systems on which we materially rely to operate our business. Risks are heightened by factors such as:

~~For several years we have experienced declining revenues and high debt levels, which has created uncertainties regarding~~ •our ~~future~~storage ~~prospects and ability to discharge our obligations. Despite the positive impacts~~ of ~~our~~digital ~~2024~~information ~~PCF~~on ~~agreements~~Internet-connected ~~and debt transactions, these uncertainties persist.~~servers;

~~Concerns~~•use ~~regarding our future prospects and ability to discharge our obligations, coupled with Lumen's relatively low stock trading price and recent reductions~~ of ~~our~~open ~~workforce, could adversely impact our ability to attract, retain~~ and ~~motivate our employees. Lumen grants equity~~software-~~based~~defined incentive awards to key personnel, the value of which is tied to Lumen's stock price, its financial performance or both. If recipients of those awards are concerned about Lumen's future stock price or financial performance, they may view less favorably the value of such equity-based incentive awards and the competitiveness of their total compensation package.networks;

~~Similarly,~~•complexity ~~customers, vendors, landlords, banks or other third parties may be less willing to transact business with us if they believe our future is uncertain, any~~ of ~~which could adversely impact~~ our ~~business,~~global ~~financial~~network ~~performance~~infrastructure, ~~financial~~including ~~position~~harder-to-secure orlegacy ~~future prospects.~~systems;

We•rising ~~could~~demand befor ~~harmed~~data ~~if our reputation is damaged.~~services;

We•increasing believe the Lumen and Level 3 brand names and our reputation are important corporate assets that help us attract and retain customers and talented employees. However, our corporate reputation is susceptible to material damage by events such as disputes with customers or competitors, cyber-attacks, service outages, data breaches, internal control deficiencies, performance failures, compliance violations, employee misconduct, government investigations or legal proceedings. Similar events impacting one of our competitors could result in negative publicity for our entire industry that indirectly harms our business. We may also experience reputational damage if customers, vendors, employees, advocacy groups, regulators, investors, the media, social media influencers or others criticize our services, operations or public positions. For instance, we could be harmed if our customer ~~experience~~scale ~~scores, as measured by "NPS" (Net Promoter Score)~~ and ~~"CHS"~~complexity ~~(Customer Health Score), for our products and services are low or declining relative to our competitors. In addition, the reputational risk~~ of ~~unauthorized~~service ~~disclosure of confidential company or customer data could increase to the extent our employees inappropriately use social networking sites or other emerging technologies, such as generative AI tools.~~requirements;

~~There is a risk that negative or inaccurate information about us, even if based on rumor or misunderstanding, could adversely affect~~ •our ~~business.~~large ~~Damage~~remote to our reputation could be difficult, expensive and time-consuming to repair. Damage to our reputation could also reduce the value and effectiveness of the Lumen brand name and could reduce investor confidence in us, having a material adverse impact on the value of our securities.workforce;

•our IT support obligations tied to divested businesses; and

•escalating sophistication of threat actors.

Consequences of a successful attack could include operational disruption, data loss or exposure, regulatory penalties, reputational harm, customer attrition, service credits or costly retention incentives, costly remediation, litigation, and loss of certifications. Any of these outcomes could require us to notify customers, regulatory agencies or the public of data incidents and have a material adverse impact on our business, operations, or financial results.

Our role in global internet traffic makes us a continuing target for advanced persistent threats, including nation-state actors and other sophisticated threat actors. Risks are amplified by AI-driven attacks, widely available evasion and anti-forensic tools that make it increasingly challenging to detect, respond to, and recover from cyber attacks. Escalating geopolitical tensions and rivalries increase the likelihood of state-sponsored cyber-attacks against us. No defenses can guarantee prevention. Consequently, we expect to experience cyber incidents in the future. While past incidents have not had a material adverse effect on our business strategy, results of operations, or financial condition, we cannot guarantee that material incidents will not occur in the future. We continue to take steps designed to limit our cyber risks, and although we maintain cyber insurance, coverage may be limited by deductibles, exclusions, and caps, and may not fully offset losses.

WeMoreover, ~~could~~as bea ~~harmed~~contractor byto ~~cyber~~the Department of Defense (“DoD”), we are contractually required to protect “controlled unclassified information” and comply with the DoD’s cybersecurity requirements, including the security controls specified in the National Institute of Standards and Technology Special Publication 800-~~attacks~~171 (“NIST SP 800-171”). The DoD has also begun phased implementation of the Cybersecurity Maturity Model Certification (“CMMC”) into its contracts. CMMC incorporates the requirements of NIST SP 800-171 and will require all contractors to, depending on the level of security required, perform a self-assessment or receive specific third-party certifications. If we are unable to protect controlled unclassified information or to achieve or maintain the required CMMC level, we may be deemed ineligible to bid on or perform certain government contracts. Noncompliance could also result in contract termination, reduced revenue, reputational harm, and increased costs associated with remediation and reassessment, any of which could materially harm our business.

~~As a critical infrastructure service provider~~Network, ~~we transmit large amounts of data over our systems and process and store highly sensitive customer data. Consequently we~~platform, ~~our~~or ~~third-party~~ service ~~providers,~~failures ~~and our customers are under constant threat of cyber-attacks. The number and sophistication of these attacks continues to increase. Despite our efforts to prevent these events, some of these attacks~~ could ~~result~~materially ~~in a material adverse~~ impact ~~to our operations due to distributed denial of service attacks, ransomware attacks, malware, virus, credential harvesting, man-in-the-middle attacks, or social engineering attacks~~us.. As previously disclosed in our 2023 reports to the SEC and various 2024 media reports, (i) sophisticated threat actors accessed our internal information technology systems in 2023 and 2024 and (ii) we experienced a ransomware attack on a limited number of our servers in 2023. The ransomware attack did not impact any operations or customer data. We do not believe these incidents had or are likely to have a material adverse impact on our ability to serve our customers or our business, operations or financial results.

AsFrom ~~further~~time ~~described~~to intime, ~~Item~~we 1Cexperience ofoutages ~~this~~in ~~annual~~our ~~report~~network, ~~cyber-attacks~~hosting, oncloud, ~~our systems may stem from a variety of sources and take many forms. Cyber-attacks can put at risk personally identifiable information customer data~~ or ~~protected~~IT ~~health information~~platforms, ~~thereby implicating stringent domestic and foreign data protection laws. These threats may also arise from failure~~ or ~~intrusions~~failures of ~~systems~~our ~~owned,~~products ~~operated~~and orservices ~~controlled~~— byincluding ~~other~~basic ~~unaffiliated~~and ~~third-party~~enhanced ~~operators,~~911 ~~upon~~emergency ~~whom~~services we— ~~are materially reliant~~ to ~~operate~~perform ~~our~~as ~~business~~intended. ~~Various~~These ~~other~~disruptions ~~factors~~expose ~~could~~us ~~intensify these risks, including (i) our maintenance of information in digital form stored on servers connected~~ to ~~the~~many ~~Internet, (ii) our use~~ of ~~open and software-defined networks, (iii)~~ the ~~challenges~~same ofrisks ~~operating~~described ~~and~~above ~~maintaining~~for ~~our complex multi~~cyber-~~continent~~attacks ~~network composed of legacy~~ and ~~acquired~~may ~~properties,~~lead ~~which is more difficult~~ to ~~safeguard~~lost ~~than newer fully-integrated networks~~revenue, ~~(iv)~~issuance ~~growth in the size and sophistication~~ of ~~our~~customer ~~customers~~credits ~~and~~or ~~their service requirements~~refunds, ~~(v)~~complete ~~increased~~customer ~~use of our network due to greater demand for data services~~loss, ~~(vi)~~regulatory ~~the large number of our employees working from remote locations~~fines, ~~(vii) our IT support agreements with purchasers of businesses we have divested over the past few years~~ and ~~(viii)~~reputational ~~as further discussed below, the difficulty of defending against increasingly sophisticated attacks~~harm.

~~Cyber-attacks~~We ~~could~~remain ~~(i)~~vulnerable ~~disrupt~~due ~~the~~to ~~proper~~factors ~~functioning~~such ofas ~~our~~aging ~~networks~~infrastructure, ~~and~~human ~~systems~~error, ~~which~~continuous ~~could~~changes in ~~turn disrupt the operations of~~ our ~~customers~~network, ~~(ii)~~introduction ~~result~~of innew ~~the~~products ~~destruction,~~and ~~loss~~technologies, ~~theft,~~vendor ~~misappropriation~~and orsupply ~~release~~chain ~~of proprietary~~weaknesses, ~~confidential,~~rogue ~~sensitive, classified or otherwise valuable information of ours, our~~ employees, ~~our~~and ~~customers~~hardware or ~~our~~software ~~customers’~~limitations. ~~end~~Remediation ~~users,~~efforts ~~(iii)~~may ~~require~~be usmore ~~to notify customers~~costly, ~~regulatory agencies or the public of data incidents~~time-consuming, ~~(iv) damage our reputation or result in a loss of business~~disruptive, ~~(v)~~and ~~require~~resource usintensive tothan ~~provide~~anticipated. ~~credits~~Future ~~for~~disruptions ~~future~~could ~~service~~lead to ~~our~~delayed ~~customers or to offer expensive incentives to retain customers~~sales, ~~(vi)~~lower ~~subject us to claims by our customers or regulators for damages~~margins, fines, ~~penalties, license~~ or ~~permit~~customer ~~revocations or other remedies~~attrition, ~~(vii)~~any ~~result in the loss~~ of ~~industry~~which ~~certifications~~could orhave ~~(viii)~~a ~~require~~material ~~significant~~adverse ~~management~~impact ~~attention~~on ~~or financial resources to remedy the resulting damages or to change~~ our ~~systems.~~business, ~~Any~~reputation, orresults ~~all~~ of ~~the~~operations, ~~foregoing~~financial ~~developments~~condition, ~~could~~and ~~have~~cash ~~a material adverse impact on us~~flows.

WeOur ~~believe~~ability ~~the~~to ~~importance~~conduct of our ~~network~~operations to global internet data flows will continue to make it a target to a wide range of threat actors, including nation state actors and other advanced persistent threat actors. Moreover, the risk of incidents is ~~likely~~materially toreliant ~~continue~~on tokey ~~increase due to several factors~~suppliers, ~~including (i) the increasing use of machine learning~~vendors, ~~AI and other sophisticated techniques to initiate cyber and phishing attacks~~customers, ~~(ii) the wider accessibility of cyber-attack tools that can circumvent security controls~~ and ~~evade detection, which can delay and limit our ability to accurately assess and fully remediate the impact of the attack, and (iii) growing threats from Chinese, Russian and~~ other ~~state~~third ~~actors due to heightened geopolitical tensions and rivalries, and the attendant increased possibility of cyber warfare targeting us in the event of a direct conflict~~parties. It should also be noted that defenses against cyber-attacks currently available to us and others are unlikely to prevent intrusions by a highly-determined, highly-sophisticated threat actor. Consequently, you should assume that we will continue to experience cyber incidents in the future. Thus far, none of our past security incidents have had a material adverse effect on us, and we continue to take steps designed to limit our cyber risks. Nonetheless, we cannot assure you that future cyber incidents or events will not ultimately have a material adverse impact on our business, operations or financial results.

~~Although~~Our ~~Lumen~~operations, ~~Technologies~~financial ~~maintains insurance coverage that may~~performance, ~~subject~~and toliquidity ~~policy~~rely ~~terms~~significantly ~~and~~on ~~conditions~~key ~~(including~~suppliers, ~~self-insured~~vendors, ~~deductibles~~licensors, ~~coverage~~customers, ~~restrictions~~ and ~~monetary~~other ~~coverage~~third ~~caps),~~parties. ~~cover~~Disruptions ~~certain~~or ~~aspects~~terminations of ~~our~~these ~~cyber~~relationships ~~risks,~~could ~~such~~have ~~insurance~~a ~~coverage~~material ~~may~~adverse beeffect ~~unavailable~~on orour ~~insufficient~~business, tofinancial ~~cover~~condition, ~~our~~or ~~losses~~results of operations.

Reliance on other communications providers: To deliver certain services within certain markets, we purchase services, lease network capacity, or interconnect with infrastructure owned by other communications carriers or cloud companies, some of which compete with us. These arrangements limit our control over service availability, delivery, and quality. We face risks that these providers may decline to renew agreements, impose unfavorable terms, or experience financial distress, including bankruptcy, that could impair ability to provide services. These risks are heightened when contracting with competitors, who may terminate agreements, increase prices, or prioritize their own traffic. In addition, some communications providers rely on our network to transmit their data or voice traffic. If these companies shift all or part of this traffic to alternative networks they own, build, or lease, our revenue could decline. For example, certain hyperscaler customers have developed infrastructure that has reduced their reliance on our network.

Reliance on key suppliers and vendors: We rely on a limited number of suppliers and vendors for critical equipment and services, including fiber optic cable, software, optronics, transmission electronics, digital switches, routing equipment, customer premise equipment and components, and operational support to assist with operating, maintaining and administering our business, including billing, security, provisioning and general operations. Our business could be adversely affected if these parties fail to deliver products or services on acceptable terms due to operational disruptions, increased pricing, security incidents, litigation, financial distress, bankruptcy, or strategic changes.

Reliance on key licensors: We license essential technologies from third parties to deliver certain products and services. These agreements may expire or be terminated, and future licenses may not be available on acceptable terms or at all. If a licensor faces intellectual property disputes or other challenges, our ability to use licensed technology could be impaired. Incorporating licensed technology into our network may also limit flexibility to deploy different technologies from alternative licensors.

Reliance on key customer contracts. We ~~could~~maintain beseveral ~~harmed~~complex, byhigh-value ~~outages~~contracts inwith ~~our~~national ~~network~~and orglobal ~~various~~customers. ~~platforms,~~These contracts are subject to factors that may reduce or ~~other~~eliminate ~~failures~~profitability. ofFailure to renew significant contracts upon expiration would adversely affect our ~~services~~results.

~~From~~Reliance ~~time~~on tolandowners: ~~time~~We inrequire ~~the ordinary course~~ rights-of ~~our business~~-way, wecolocation ~~experience outages in our network~~agreements, ~~hosting~~franchises, ~~cloud or IT platforms~~licenses, orand ~~failures~~other ofauthorizations ~~our~~from ~~products~~governmental orbodies, ~~services~~railway tocompanies, ~~perform~~utilities, incarriers, ~~the~~and ~~manner~~other ~~anticipated.~~third-party ~~These~~landowners ~~disruptions~~to ~~expose~~locate usa toportion ~~several~~ of ~~the~~our ~~same~~network ~~risks~~equipment ~~listed above for cyber-attacks~~over, ~~including~~on ~~the~~or ~~loss~~under oftheir ~~customers~~respective properties, ~~the~~or ~~issuance~~to ofconduct ~~credits~~operations orwithin ~~refunds,~~their ~~and~~jurisdictions. ~~regulatory~~Many ~~fines.~~of Wethese ~~remain~~authorizations ~~vulnerable~~will toexpire ~~future~~within ~~disruptions~~the ~~due~~next five to ~~several~~ten ~~factors,~~years ~~including~~unless ~~the~~renewed. ~~challenges~~Our ofoperations ~~maintaining~~could ~~and~~be ~~replacing~~adversely ~~aging~~affected orif ~~obsolete~~authorizations ~~network elements~~lapse, ~~human~~are ~~error~~cancelled, ~~continuous changes in our network~~terminated, ~~the~~allowed ~~introduction~~to ~~of new products or technologies~~expire, ~~vulnerabilities in our vendors~~ or ~~supply~~become ~~chain,~~subject ~~aberrant~~to ~~employees~~material ~~and~~price ~~hardware and software limitations~~increases. ~~The~~Network ~~process~~expansion ~~for~~may ~~remediating~~also ~~any interruptions, outages, delays or cessations of service could~~ be ~~more~~delayed ~~expensive,~~if ~~time-consuming,~~we ~~disruptive~~cannot ~~and~~secure ~~resource~~necessary ~~intensive~~permits ~~than~~or ~~planned~~approvals. ~~Delayed~~We ~~sales,~~cannot ~~lower~~assure ~~margins,~~successful ~~fines~~renewal or ~~lost~~replacement ~~customers resulting from future disruptions could have a material adverse impact on our business, reputation, results~~ of ~~operations,~~these ~~financial condition, and cash flows~~arrangements.

~~Market~~Extreme ~~prices~~weather ~~for many of our services have decreased in the past,~~ and ~~any~~climate ~~similar~~change ~~price~~could ~~decreases~~disrupt inoperations ~~the future will adversely affect our revenue~~ and ~~margins~~increase costs.

~~Over~~Many ~~the~~of ~~past~~our ~~several~~domestic ~~years,~~facilities aare ~~range~~located ofin ~~competitive~~regions susceptible to severe weather and ~~technological~~natural ~~factors~~disasters, including ~~robust~~tropical ~~network~~storms, ~~construction~~hurricanes, ~~and~~tornadoes, ~~intense~~earthquakes, ~~competition~~floods, ~~have~~wildfires, ~~lowered~~or ~~market~~other ~~prices~~casualty ~~for~~events. ~~many~~These ofevents ~~our~~have ~~products~~disrupted operations in the past and ~~services.~~may Ifoccur ~~these~~again, ~~market~~potentially ~~conditions~~causing ~~persist~~significant damage such as downed transmission lines, weflooded ~~may~~facilities, ~~need~~power tooutages, ~~continue~~fuel toshortages, ~~reduce~~network ~~prices~~delays toor ~~retain~~failures, ~~customers~~property and ~~revenue~~equipment loss, and business interruptions. IfDue ~~future~~to ~~price~~substantial ~~reductions~~deductibles, ~~are~~coverage ~~necessary~~limits and exclusions, and limited availability, we have typically recovered only a portion of our ~~operating~~losses ~~results~~through ~~will~~insurance. ~~suffer~~Our ~~unless~~system weredundancy ~~are~~and ~~able~~other measures we implement to ~~offset~~protect ~~these~~infrastructure ~~reductions~~and bymaintain ~~reducing~~operations ~~our~~may ~~operating~~prove ~~expenses~~inadequate orto ~~increasing~~sustain our ~~sales~~operations ~~volumes~~following such events. Any such occurrence could result in lost revenue, litigation risks, reputational harm, and reduced profitability.

~~Our~~In ~~operations~~addition, ~~financial~~climate ~~performance~~change ~~and~~may ~~liquidity~~increase ~~are~~the ~~materially~~frequency ~~reliant~~or onseverity ~~key~~of ~~suppliers~~these events, ~~vendors~~heightening our exposure to operational disruptions and ~~other~~supply ~~third~~chain ~~parties~~risks. Climate change could also require increased investment in network resilience and lead to additional regulatory requirements that may adversely affect our operations or financial results.

Our ~~ability~~environmental, tosocial, ~~conduct~~and ~~our~~governance ~~operations~~programs ~~could~~and ~~have~~disclosures amay ~~material~~expose ~~adverse impact on~~ us ifto ~~certain~~legal, ~~of our arrangements with third parties were terminated~~operational, ~~including~~and ~~those~~reputational ~~further described below~~risks.

~~Reliance~~We onare ~~other~~subject ~~communications~~to ~~providers.~~evolving Toand ~~offer~~sometimes ~~certain~~conflicting, ~~services~~laws, inregulations, ~~certain of our markets~~policies, weand ~~must~~investor ~~either~~and ~~purchase~~other ~~services~~stakeholder orexpectations ~~lease~~concerning ~~network~~environmental, ~~capacity from~~social, orand ~~interconnect~~governance ~~our network with~~matters, ~~the~~such ~~infrastructure~~as ofenvironmental ~~other~~sustainability ~~communications~~and ~~carriers~~climate orchange, ~~cloud~~both ~~companies~~in ~~who~~the ~~typically~~United ~~compete~~States ~~against~~and ~~us in those markets~~internationally. Our ~~reliance~~environmental onand ~~these~~sustainability ~~supply~~initiatives, orgoals, ~~interconnection~~and ~~arrangements~~targets ~~limits~~may ~~our~~be ~~control~~difficult ~~over~~to ~~the~~achieve ~~delivery, quality~~ and ~~quantity~~costly ofto ~~these purchased services~~implement. InIncreased ~~addition,~~required weor ~~are~~voluntary ~~exposed~~disclosures toregarding ~~the~~these ~~risk~~efforts ~~that~~could ~~other~~subject ~~companies~~us ~~may be unwilling or unable~~ to ~~continue~~scrutiny or ~~renew~~criticism ~~these~~concerning ~~arrangements~~their inaccuracy, ~~the~~adequacy, ~~future~~or ~~for~~completeness. ~~several~~In ~~reasons~~addition, ~~including~~in ~~bankruptcy.~~a ~~Those~~climate ~~risks~~where there are ~~heightened~~changing ~~when~~and weincreasingly ~~contract~~divergent ~~with~~views aon ~~competitor~~where ~~who~~our ~~may~~focus ~~have~~should ~~incentives~~be toon ~~act~~these inmatters, ~~ways~~our ~~unfavorable~~initiatives, ~~to us~~goals, ~~including~~or ~~by terminating those contracts~~commitments, ~~imposing price increases~~ or ~~favoring~~any ~~their~~revisions ~~transmissions~~to ~~over ours. Additionally~~them, ~~several~~are ~~companies~~often ~~rely~~criticized onand ~~our~~the ~~network~~accuracy, toadequacy, ~~transmit~~or ~~their~~completeness ~~data~~of orsuch ~~voice~~disclosures ~~traffic~~challenged. ~~Their~~Failure ~~reliance~~— onor ~~our~~perceived ~~network~~failure ~~exposes~~— us to ~~the~~meet ~~risk~~our ~~that~~environmental ~~they~~commitments ~~may~~or ~~transfer~~evolving ~~all~~stakeholder orexpectations acould ~~portion~~result ofin ~~this~~regulatory ~~traffic~~or ~~from~~legal ~~our~~proceedings, ~~network~~loss toof ~~alternative~~customers ~~networks~~or ~~owned~~employees, ~~constructed~~reputational harm, or ~~leased~~other byadverse ~~them,~~impacts ~~thereby~~on ~~reducing~~ our ~~revenue~~business. ~~For instance~~Conversely, ~~certain~~we ofmay ~~our~~lose ~~hyperscaler~~stakeholders ~~customers~~who ~~have~~oppose ~~built~~such ~~infrastructure~~initiatives ~~that~~or ~~has~~face ~~reduced~~claims ~~their~~alleging ~~reliance~~these onefforts uscaused harm.

Reliance on key suppliers and vendors. We depend on a limited number of suppliers and vendors to provide us, directly or through other suppliers, with equipment and services relating to our network infrastructure, including fiber optic cable, software, optronics, transmission electronics, digital switches, routing equipment, customer premise equipment, and related components. We also rely on software and service vendors or other parties to assist us with operating, maintaining and administering our business, including billing, security, provisioning and general operations. Our operations could be adversely affected in the future if any of these vendors are unable or unwilling for any reason to continue to deliver their products or services or terms acceptable to us, including due to business interruptions, security incidents, litigation, financial distress, bankruptcy or changes in their operations or business strategies.

Reliance on key licensors. We rely on key technologies licensed from third parties to deliver certain of our products and services. Our agreements with these licensors may expire or be terminated, and some of the licenses may not be available to us in the future on terms acceptable to us or at all, including if the third-party licensor violates, or is alleged to have violated, the intellectual property rights of others. Moreover, if we incorporate licensed technology into our network, we may have limited flexibility to deploy different technologies from alternative licensors.

Reliance on key customer contracts. We have several complex high-value national and global customer contracts. These contracts are frequently impacted by a variety of factors that could reduce or eliminate the profitability of these contracts. Moreover, we would be adversely impacted if we fail to renew major contracts upon their expiration.

Reliance on landowners. We rely on rights-of-way, colocation agreements, franchises, licenses and other authorizations granted by governmental bodies, railway companies, utilities, carriers and other third parties to locate a portion of our network equipment over, on or under their respective properties, or to conduct operations within their jurisdictions. A significant number of these authorizations are scheduled to lapse over the next five to 10 years, unless we are able to extend or renew them. Our operations could be adversely affected if any of these authorizations are cancelled, or otherwise terminate or lapse, or if the landowner requests price increases. Similarly, our buildout plans can be delayed if we cannot receive necessary landowner authorizations or governmental permits. We cannot assure you we will be able to successfully extend these arrangements when their terms expire, or to enter into new arrangements that may be necessary to implement our network expansion opportunities.

Extreme weather conditions and climate changes could disrupt our operations, cause us to incur substantial additional capital and operating costs or negatively affect our business.

A substantial number of our domestic facilities are located in areas that subject them to the risks associated with severe tropical storms, hurricanes, tornadoes, earthquakes, floods, wildfires or other similar casualty events. From time to time these events have disrupted our operations, and similar future events could cause substantial damages, including downed transmission lines, flooded facilities, power outages, fuel shortages, network delays or failures, damaged or destroyed property and equipment, and business interruptions. Due to substantial deductibles, coverage limits and exclusions, and limited availability, we have typically recovered only a portion of our losses through insurance. Our system redundancy and other measures we take to protect our infrastructure and operations from the impacts of such events may be ineffective or inadequate to sustain our operations following such events. Any of these occurrences could result in lost revenues from business interruption, damage to our reputation and reduced profits.

Climate changes may increase the frequency or severity of natural disasters and other extreme weather events in the future, which would increase our exposure to the above-cited risks and could disrupt our supply chain from our key suppliers and vendors. Climate changes could also require us to continue to increase our spending on network resilience initiatives, and could result in additional regulation impacting our operations or profitability.

Our environmental programs and disclosures may expose us to reputational, legal and business risks.

Our reputation and brands could be impacted by our public environmental initiatives, including our environmental sustainability initiatives. These initiatives, goals, or targets could be difficult to achieve and costly to implement. To the extent that our required and voluntary disclosures about environmental initiatives increase, we could be criticized for their accuracy, adequacy, or completeness. We could fail to achieve, or be perceived to fail to achieve, our environmental-related targets, goals, or commitments. Our actual or perceived failure to achieve our environmental-related targets, goals, commitments or to meet evolving stakeholder expectations or standards could adversely impact us by resulting in legal or regulatory proceedings against us, customer or employee attrition, reputational damage, or other negative impacts on our business. Conversely, we may fail to attract or retain customers, vendors, employees or other stakeholders who are opposed to our environmental-related initiatives, or may face claims from stakeholders who believe such initiatives harmed them or us.

Adverse developments impacting our non-consolidated affiliates could indirectly impact us.

Our consolidated operations constitute only a portion of the consolidated operations of our corporate parent, Lumen. We engage in various intercompany transactions with affiliates of Lumen that are not members of our consolidated group of companies. Events or developments that adversely impact these non-consolidated affiliates will not directly impact our consolidated financial position or performance as reported under GAAP, but could nonetheless indirectly adversely impact us to the extent such developments interfere with the ability of such non-consolidated affiliates to provide services or pay amounts to which we or our subsidiaries are entitled. For these reasons, you are urged to review the risk factor disclosures contained in Item 1A of Lumen’s Annual Report on Form 10-K for the year ended December 31, ~~2024~~2025.

We face other business risks.

We face ~~other~~additional business risks, including among others, (i) the difficulties of managing and administering an organization that offers a complex set of products to a diverse range of customers across several continents, (ii) the possibility that supply constraints, labor shortages, construction delays or other factors could hamper our ability to attain our infrastructure buildout plans, (iii) the risk that the continuation of high vacancy rates in the fiber on-net buildings we serve could reduce demand for our services and (iv) risks and uncertainties inherent in acquiring or disposing of businesses, or engaging in other strategic transactions.:

•challenges in managing a global organization that offers a complex portfolio of products to a diverse customer base;

•potential supply constraints, labor shortages, construction delays, or other factors that could impede our infrastructure buildout plans;

•risk that sustained high vacancy rates in fiber on-net buildings we serve could reduce demand for our services; and

•uncertainties and risks associated with acquiring or disposing of businesses or pursuing other strategic transactions.

Legal and Regulatory Risks

WeComplex ~~are~~and ~~subject to an extensive,~~ evolving ~~regulatory~~regulations ~~framework that~~ could ~~create~~increase operational orand compliance costs.

As explained in greater detail elsewhere in this annual report, ~~(i)~~we ~~our~~are ~~domestic~~subject ~~operations~~to ~~are~~numerous, ~~regulated~~often bycomplex ~~the~~and ~~FCC~~occasionally conflicting laws and ~~other~~regulations at the international, federal, state, and local ~~agencies~~levels. ~~and~~While ~~(ii)~~Level ~~our~~3 ~~international~~provides ~~operations~~competitive services that are ~~regulated~~generally bynot asubject ~~wide~~to ~~range~~state ofregulation ~~various~~to ~~foreign~~the ~~and~~same ~~international~~degree ~~bodies.~~as WeILECs, we cannot assure ~~you~~that we will besuccessfully ~~successful~~obtain ~~in obtaining~~ or ~~retaining~~maintain all ~~regulatory~~authorization licenses necessary to ~~carry~~operate ~~out~~in our ~~business~~markets, inand ~~our~~full ~~various~~compliance ~~markets~~cannot be guaranteed at all times. Even ifwhen weauthorizations are secured, the ~~prescribed~~ service standards and conditions imposed ~~on us~~ under these ~~licenses~~authorizations and related laws may increase ~~our~~ costs, ~~limit~~restrict ~~our~~ operational flexibility, or ~~result~~expose inus to third-party claims.

~~While~~Governmental ~~Level~~agencies, 3including ~~provides~~state ~~competitive~~attorneys ~~services~~general, ~~that~~have ~~are~~routinely ~~generally~~investigated ~~not~~our ~~subject~~business topractices ~~state~~in ~~regulation to~~ the ~~same~~past ~~degree~~and asare ~~ILECs,~~expected weto ~~are~~continue ~~subject~~doing toso. ~~numerous~~These ~~requirements~~investigations ~~and~~have ~~interpretations~~resulted ~~under~~in ~~various~~substantial ~~international~~fines and, ~~federal~~in some cases, ~~state~~consent ~~and~~decrees ~~local~~that ~~laws,~~restrict ~~rules~~future conduct and ~~regulations,~~carry ~~which~~judicial ~~are~~enforcement ~~often~~risks. ~~quite~~Breaching ~~detailed~~a orconsent ~~unclear~~decree ~~and~~could ~~are~~subject ~~occasionally~~us into ~~conflict~~contractual ~~with~~remedies ~~each~~and ~~other.~~contempt ~~Accordingly~~of court proceedings, weany ~~cannot~~of ~~ensure~~which wecould ~~will~~have ~~always~~material beadverse inconsequences. ~~compliance~~Future ~~with~~investigations ~~all~~could ~~these~~lead ~~requirements~~to atlitigation, ~~any~~penalties, ~~particular~~operational ~~time~~changes, or reputational harm.

~~Various~~We ~~governmental~~provide ~~agencies,~~services ~~including~~to ~~state~~various ~~attorneys general~~federal, ~~with~~state ~~jurisdiction~~and ~~over~~local ~~our~~agencies. ~~operations~~Failure ~~have routinely in the past investigated our business practices either in response~~ to ~~customer~~comply ~~complaints~~with orcomplex onregulations, ~~their own initiative~~laws, ~~and~~or ~~are~~contractual ~~expected~~terms tocould ~~continue~~result ~~to do the same~~ in ~~the~~penalties, ~~future.~~negative ~~Certain of these investigations have resulted in substantial fines in the past. On occasion~~publicity, wesuspension ~~have~~or ~~resolved~~debarment ~~such~~from ~~matters~~future ~~by entering into consent decrees~~programs, ~~which~~or ~~are~~revocation ~~court~~of ~~orders~~FCC ~~that frequently restrict our future conduct~~licenses. IfGovernment ~~breached~~agencies byreserve ~~us,~~the ~~these~~right ~~consent decrees expose us not only~~ to ~~contractual~~terminate ~~remedies,~~contracts ~~but~~for ~~also~~convenience toor ~~judicial~~lack ~~enforcement via contempt~~ of ~~court proceedings~~funding, ~~any of~~ which could ~~have~~materially ~~material~~impact ~~adverse consequences. Additionally, future investigations can potentially result in enforcement actions, litigation, fines, settlements or reputational harm, or could cause us to change~~ our ~~sales~~results ~~practices~~of or operations.

We ~~provide~~are ~~products~~subject ~~or services~~ to ~~various~~numerous ~~federal,~~data ~~state~~privacy and ~~local~~security ~~agencies. Our failure to comply with complex governmental regulations and~~ laws, ~~applicable~~including torecently ~~these~~enacted ~~programs,~~ or ~~the~~strengthened ~~terms~~requirements ~~of our governmental contracts, could result~~ in usthe ~~suffering~~EU ~~substantial negative publicity or penalties, being suspended or debarred from future governmental programs or contracts for a significant period of time~~ and in certain ~~instances could lead to the revocation of our FCC licenses~~U.S. ~~Moreover, certain governmental agencies frequently reserve the right to terminate their contracts for convenience or if funding is unavailable~~states. IfThese ~~our~~laws ~~governmental contracts~~ are ~~terminated~~complex, ~~for~~frequently ~~any reason~~change, orand ifoften weconflict ~~are~~across ~~suspended~~jurisdictions. orCustomers ~~debarred~~may ~~from~~impose ~~governmental~~additional ~~programs~~requirements. orNoncompliance ~~contracts, it~~ could ~~have~~result ain ~~material~~substantial ~~adverse~~penalties ~~impact on our results of operations~~ and ~~financial~~reputational ~~condition~~damage.

ADue ~~variety of state, national, foreign and international laws and regulations apply~~ to the ~~collection,~~nature ~~use,~~of ~~retention,~~our ~~protection~~operations, ~~security,~~we ~~disclosure~~have been, ~~transfer~~ and ~~other~~expect ~~processing~~to ofcontinue ~~personal~~to ~~and~~be ~~other~~impacted ~~data.~~by ~~The~~regulatory ~~European~~developments ~~Union~~related ~~and~~to ~~other~~climate ~~international regulators~~change, ~~as well as some state governments~~including, ~~have~~for ~~recently enacted or enhanced data privacy legal requirements~~example, ~~and~~the ~~other~~direct ~~governments~~regulation ~~are~~of ~~considering~~greenhouse ~~establishing~~gas ~~similar~~emissions or ~~stronger~~carbon ~~protections.~~policies ~~Many~~that ofcould ~~these~~result ~~laws~~in ~~are~~a ~~complex~~tax ~~and~~on ~~change~~such ~~frequently~~emissions. ~~and~~In ~~often~~addition, ~~conflict~~policy-driven ~~with~~changes ~~the laws~~ in ~~other~~the ~~jurisdictions.~~prices ~~Some~~ of ~~our~~fuel ~~customers~~or ~~impose~~energy ~~similar~~in ~~requirements~~geographies onin uswhich ~~that~~we ~~are~~operate ~~equally~~could ormake it more ~~demanding.~~expensive Iffor weus ~~fail~~ to ~~comply~~purchase ~~with~~energy ~~any~~to ofpower ~~these~~our ~~governmental~~networks ~~or contractual requirements, we could incur potential substantial penalties~~ and ~~reputational~~data ~~damage~~centers.

20Laws governing our operations have long been unsettled, limiting our ability to plan effectively. Regulatory uncertainty has increased following a 2024 U.S. Supreme Court decision eliminating judicial deference to agency interpretations of ambiguous federal laws. Future legislation or court rulings could impose burdensome requirements or liabilities. For example, our business could be materially impacted if U.S. Congress amends or repeals current federal limitations on the liability of private network providers, such as us, for third-party content stored or transmitted on private networks, as proposed by certain officials and consumer groups. We could also be significantly affected by initiatives to expand regulation of internet service providers or strengthen data privacy laws.

For years, the laws governing our operations have been unsettled, which has impacted our ability to plan for the future. We expect regulatory uncertainty to increase following a 2024 U.S. Supreme Court decision reversing a prior ruling that required courts to defer to reasonable agency interpretations of ambiguous federal laws. New laws or court decisions could affect our services or expose us to burdensome requirements or liabilities. In particular, our business could be materially impacted if the U.S. Congress amends or eliminates current federal law limitations on the liability of private network providers, such as us, against claims related to third-party content stored or transmitted on private networks, as currently proposed by certain governmental officials, legislative leaders and consumer interest groups. We could also be materially affected if proposals to increase the regulation of internet service providers or to further strengthen data privacy laws are enacted or implemented.19

~~Third-party~~We ~~content~~may ~~stored~~face orlegal ~~transmitted~~and onreputational ~~our~~risks ~~networks~~related ~~could~~to ~~result~~third-party incontent ~~liability~~on ~~or otherwise damage~~ our ~~reputation~~network.

~~While~~Although weour service contracts generally disclaim liability for third-party content ~~in most of our service contracts~~, as a private network provider we ~~potentially~~ could be ~~exposed~~subject to ~~legal~~ claims ~~relating~~arising tofrom ~~third-party~~ content stored or transmitted on our ~~networks~~systems. ~~Such~~These claims ~~could~~may ~~involve,~~include ~~among others,~~ allegations of defamation, invasion of privacy, copyright infringement, or ~~aiding~~facilitating ~~and~~prohibited ~~abetting restricted~~ activities such as online gambling or pornography. ~~Although~~While we believe our liability ~~for these types of claims~~ is limited under current law, ~~suits~~similar claims against other carriers have ~~been~~succeeded, ~~successful~~ and we cannot assure ~~you~~ that our defenses ~~will~~would prevail. ~~Such~~In ~~third-party~~addition, such content could ~~also~~ result in ~~adverse~~negative publicity and ~~damage~~harm our reputation. ~~Moreover~~Furthermore, asproposed ~~noted~~changes ~~above, pending proposals~~ to ~~change~~applicable ~~the~~laws ~~law~~ could ~~materially~~significantly ~~heighten~~increase our ~~legal~~ exposure and ~~potentially~~ require us to implement ~~changes~~measures to ~~manage~~mitigate ~~this~~these ~~exposure~~risks.

Pending legal proceedings ~~against~~involving us orand our affiliates could have a material adverse impact on us.

~~There~~We ~~are~~and ~~several~~our ~~potentially~~affiliates ~~material~~are ~~proceedings~~involved ~~pending~~in ~~against~~several uspotentially ~~and~~material ~~our affiliates~~proceedings, including ~~several~~ derivative and class action ~~suits~~lawsuits. ~~Results~~The outcome of these ~~legal~~matters ~~proceedings~~is ~~cannot~~inherently beuncertain, ~~predicted~~and ~~with certainty. As of any given date~~ we ~~could~~may ~~have~~incur ~~exposure to~~ losses ~~under~~that ~~proceedings~~exceed inour ~~excess~~recorded ofliabilities ~~our~~or ~~accrued~~insurance ~~liability~~coverage. ~~For~~Any ~~each~~ of ~~these reasons, any of~~ the proceedings described in Note 16 — Commitments, Contingencies and Other Items in Item 8, as well as other current ~~litigation not described therein~~ or future litigation, could have a material adverse effect on our business, reputation, financial position, operating results, the ~~trading~~market price of our debt securities, and our ability to access ~~the~~ capital ~~markets~~. We ~~can~~cannot ~~give~~provide ~~you~~assurance noregarding ~~assurances as to~~ the ultimate impact of these matters ~~on us~~.

We may not be successful in protecting and enforcing our intellectual property rights.

We rely on ~~various~~ patents, copyrights, trade names, trademarks, service marks, trade secrets, and other ~~similar~~ intellectual property rights, as well as confidentiality agreements and procedures, to ~~establish~~safeguard ~~and protect~~ our proprietary ~~rights~~assets. ~~For a variety of reasons~~However, ~~however,~~ these ~~steps~~protections may not be fully ~~protect us~~effective, including due to ~~inherent~~legal limitations onand ~~the~~enforcement ~~ability to enforce these rights~~challenges. If we are ~~unsuccessful~~unable into ~~protecting~~protect or ~~enforcing~~enforce our intellectual property rights, our business, competitive position, operating results, ~~of operations~~ and financial condition could be adversely affected.

~~Issues~~Our ~~related to our~~ use of ~~artificial intelligence (~~AI) ~~could~~technology ~~give~~may ~~rise~~create tooperational, legal ~~or regulatory actions~~, ~~damage~~and ~~our~~reputational ~~reputation or otherwise materially harm our business~~risks.

We ~~currently~~ incorporate AI technology ininto certain ~~of our~~ products, ~~and~~ services, and ~~in our~~ business ~~operations~~processes. ~~Due~~AI’s ~~to the~~ complexity ofand ~~its~~reliance ~~design~~on ~~and~~ algorithms, AIpresent ~~presents various~~ risks ~~and~~that ~~challenges, and its use~~ could ~~cause~~lead to operational disruptions or ~~have~~ other unintended ~~adverse~~ consequences. ~~While~~Although we ~~aim~~strive to use AI responsibly and attempt to identify and mitigate ethical and legal ~~issues presented by its use~~concerns, we may benot ~~unsuccessful~~identify ~~in identifying~~ or ~~resolving~~resolve issues before they ~~arise~~occur. ~~Our~~Risks associated with our use of AI ~~may~~include ~~give rise to risks related to~~ harmful ~~content,~~or inaccurate ~~output~~outputs, bias, intellectual property infringement or misappropriation, defamation, privacy incidents, and cybersecurity vulnerabilities. In addition, ~~among~~emerging ~~others.~~regulations ~~The~~in the United States, the European Union, and other ~~governmental~~jurisdictions ~~bodies have taken initial steps to regulate AI, which~~ could ~~ultimately~~ increase ~~AI’s~~ legal ~~risks~~exposure or ~~decrease~~limit ~~its~~AI’s ~~usefulness~~utility. For ~~all~~ these reasons, our use of AI could materially harm our business, operations, or reputation.

21Intellectual property claims could result in significant costs and operational disruptions.

We have ~~been~~in ~~accused~~the ofpast ~~infringing~~and may in the future receive notices or be named in lawsuits alleging infringement of third-party intellectual property rights. ofWe ~~others~~have ~~and~~responded or will ~~likely~~respond ~~face~~to ~~similar~~these ~~accusations~~notices inand ~~the~~claims ~~future~~when appropriate and expect this industry-wide trend to continue. If any of these claims are successful, we could be required to pay substantial damages, discontinue use of certain technology, or pay royalties to continue using it. These outcomes could reduce revenues or profit margins, impair operations, or require us to stop selling or redesign products or services, any of which could materially adversely affect our business. In addition, we may need to obtain rights to use third-party intellectual property to develop new products or services. If we cannot secure these rights on reasonable terms, our ability to introduce new offerings could be restricted, delayed, or made more costly.

WeAny ~~routinely~~actual ~~receive notices from third parties~~ or ~~are~~perceived ~~named~~failure into ~~lawsuits~~comply ~~filed~~with bynew ~~third parties claiming we have infringed~~ or ~~are~~existing ~~infringing~~laws, ~~their~~regulations ~~intellectual property rights. We are currently responding to several of these notices~~ and ~~claims~~other ~~and~~requirements ~~expect~~relating ~~this industry-wide trend will continue. If these claims succeed, we could be required~~ to ~~pay~~the ~~significant monetary damages~~privacy, tosecurity ~~cease~~and ~~using~~processing ~~the applicable technology or to make royalty payments to continue using the applicable technology. If we are required to take one or more~~ of ~~these~~Personal ~~actions,~~Information ~~our revenues or profit margins may decline, our operations~~ could be materially ~~impaired or we may be required to stop selling or redesign one or more of our products or services, any of which could have a material adverse~~ impact on our business. Similarly, from time to time, we may need to obtain the right to use certain patents or other intellectual property from third parties to be able to offer new products and services. If we cannot obtain rights to use any required technology from a third-party on reasonable terms, our ability to offer new products and services may be prohibited, restricted, made more costly or delayed.

~~Our~~In ~~international~~connection ~~operations~~with ~~expose~~running usour business, we receive, store, use and otherwise process information that relates to ~~various~~individuals ~~regulatory~~or constitutes “personal information,” ~~currency~~“personal data,” ~~tax~~“personally identifiable information,” ~~legal~~or similar terms under applicable data privacy laws (collectively, “Personal Information”). We are therefore subject to a variety of federal, state and foreign laws, regulations and other ~~risks~~requirements relating to the privacy, security and processing of Personal Information.

Our international operations are subject to a wide range of U.S. and non-U.S. laws, regulations, treaties, tariffs and other directives governing our operations in international jurisdictions in which we provide services, either directly or indirectly through our contractual arrangements with other carriers. Many of these laws or other directives are complex, change frequently and conflict with the laws in other jurisdictions to which we are bound. There is a risk that these laws or other directives could materially restrict our ability to deliver services in various international jurisdictions or expose us to the risk of potential penalties, license revocations or contract terminations if we violate them. In addition, if the U.S. continues increasing its tariffs, we could incur additional expense that we are unable to recover from our customers. 20

InThe ~~addition~~application toand ~~these~~interpretation ~~international~~of ~~regulatory~~such ~~risks,~~requirements ~~some~~are ofconstantly ~~the~~evolving ~~other~~and ~~risks~~are ~~inherent~~subject into ~~conducting~~change, ~~business~~creating ~~internationally~~a ~~include:~~complex ~~economic,~~compliance ~~social~~environment. ~~and~~In ~~political~~some ~~instability~~cases, ~~with~~these ~~the~~requirements ~~attendant~~may ~~risks~~be ofeither ~~terrorism,~~unclear ~~kidnapping,~~in ~~extortion,~~their ~~civic~~interpretation ~~unrest,~~and ~~potential~~application ~~seizure~~ or ~~nationalization~~they ofmay ~~assets;~~have ~~currency~~inconsistent ~~and~~or ~~exchange~~conflicting ~~controls,~~requirements ~~repatriation~~with ~~restrictions~~each ~~and~~other. ~~fluctuations~~Further, inthere ~~currency~~has ~~exchange~~been ~~rates,~~a ~~problems~~substantial ~~collecting~~increase ~~accounts~~in ~~receivable;~~legislative ~~the~~activity ~~difficulty~~and orregulatory ~~inability~~focus inon ~~certain~~data ~~jurisdictions~~privacy toand ~~enforce~~security ~~contract~~in orthe ~~intellectual~~United ~~property~~States ~~rights;~~and ~~reliance~~elsewhere, onincluding ~~certain~~in ~~third~~relation ~~parties~~to ~~with~~cybersecurity ~~whom~~incidents. weIn ~~lack~~addition, ~~extensive~~some ~~experience;~~such ~~supply~~requirements ~~chain~~place ~~challenges;~~restrictions ~~and~~on ~~challenges~~our inability ~~securing~~to ~~and~~process ~~maintaining~~Personal ~~the~~Information ~~necessary~~across ~~physical~~our ~~and~~business ~~telecommunications~~or ~~infrastructure~~across country borders.

22It is possible that new laws, regulations and other requirements, or amendments to or changes in interpretations of existing laws, regulations and other requirements, may require us to incur significant costs, implement new processes, or change our processing of information and business operations, which could ultimately hinder our ability to grow our business by extracting value from our data assets. In addition, any failure or perceived failure by us to comply with laws, regulations and other requirements relating to the privacy, security and processing of information could result in legal claims or proceedings (including class actions), regulatory investigations or enforcement actions. We could incur significant costs in investigating and defending such claims and, if found liable, pay significant damages or fines or be required to make changes to our business. These proceedings and any subsequent adverse outcomes may subject us to significant negative publicity and an erosion of trust. If any of these events were to occur, our business, results of operations, and financial condition could be materially adversely affected.

International operations expose us to regulatory, economic, and political risks.

Our international operations are subject to a wide range of U.S. and non-U.S. laws, regulations, treaties, tariffs, and governing our operations in international jurisdictions, either directly or indirectly through our contractual arrangements with other carriers. Many of these laws or directives are complex, frequently change, and may conflict across jurisdictions in which we provide services. These requirements could materially restrict our ability to provide services internationally or expose us to penalties, license revocations, or contract terminations if violated. In addition, increases in U.S. tariffs could result in additional costs that we may not recover from customers.

Beyond regulatory risks, conducting business internationally involves other challenges, including: economic, social and political instability, with the attendant risks of terrorism, kidnapping, extortion, civic unrest, potential seizure or nationalization of assets; currency and exchange controls, repatriation restrictions and fluctuations in currency exchange rates, problems collecting accounts receivable; the difficulty or inability in certain jurisdictions to enforce contract or intellectual property rights; reliance on certain third parties with whom we lack extensive experience; supply chain challenges; and challenges in securing and maintaining the necessary physical and telecommunications infrastructure. Any of these factors could materially adversely affect our operations and financial condition.

Financial Risks

Our significant debt levels expose us to a broad range of risks.

AsWe ofcarry ~~December~~significant ~~31,~~levels ~~2024, we had approximately $8.8 billion~~ of ~~outstanding~~debt ~~consolidated secured indebtedness~~ and ~~$964~~related ~~million~~debt ofservice ~~outstanding consolidated unsecured indebtedness (excluding (i) finance leases and other~~ obligations, ~~(ii)~~which ~~unamortized~~could ~~premiums,~~adversely ~~net,~~affect ~~(iii)~~us ~~unamortized~~in ~~debt~~several ~~issuance~~ways, ~~costs and (iv) intercompany debt.)~~including:

~~Our~~•requiring ~~significant~~us ~~levels~~to allocate a large portion of ~~debt~~operating ~~and~~cash ~~related~~flow ~~debt~~to ~~service~~interest ~~obligations~~and ~~could~~principal ~~adversely~~payments, ~~affect~~reducing usfunds inavailable ~~several~~for ~~respects~~other purposes, including: acquisitions, capital expenditures, strategic initiatives, and dividends to our ultimate parent company;

•~~requiring~~limiting ~~us to dedicate a substantial portion of~~ our ~~cash~~ability ~~flow from operations~~ to ~~the~~capitalize ~~payment of interest and principal~~ on ~~our~~business ~~debt,~~opportunities ~~thereby~~or ~~reducing~~adequately ~~the~~respond ~~funds available~~ to uschanging ~~for other purposes~~market, ~~including acquisitions~~industry, ~~capital~~or ~~expenditures,~~economic ~~strategic initiatives and dividends to our direct parent company~~conditions;

•~~hindering~~increasing ~~our~~vulnerability ~~ability~~ to ~~capitalize~~economic onor ~~business~~industry ~~opportunities~~downturns and tointerest ~~plan~~rate ~~for~~fluctuations or— ~~react~~particularly toon ~~changing~~variable-rate ~~market, industry, competitive or economic conditions~~debt;

•making us more vulnerable to economic or industry downturns, including interest rate increases (especially with respect to our variable rate debt);

•placing us at a competitive disadvantage compared to less leveraged companies;

•~~adversely~~negatively ~~impacting~~affecting ~~other~~perceptions ~~parties’ perception~~ of ~~Lumen,~~our ~~including~~company ~~but~~among ~~not limited to existing or potential~~ customers, vendors, employees, orand creditors;

•making it more difficult or ~~expensive~~costly ~~for us~~ to obtain ~~any necessary~~ future financing or refinancing, ~~including~~potentially ~~the~~forcing ~~risk~~asset ~~that~~sales ~~this could force us to sell assets~~ or ~~take~~ other ~~less~~unfavorable ~~desirable~~ actions to raise capital; and

•increasing the risk that we may not meet the covenants contained in our debt agreements or timely make all required debt payments, either of which could result in the acceleration of some or all of our outstanding indebtedness.21

~~The~~•heightening ~~effects~~the ofrisk ~~each~~ of ~~these~~covenant ~~factors~~breaches ~~could be intensified if we increase our borrowings~~ or ~~experience~~missed ~~any~~payments, ~~downgrade~~which incould ~~our~~trigger ~~credit~~acceleration ~~ratings or those~~ of ~~our~~some ~~affiliates.~~or ~~Subject~~all ~~to certain limitations and restrictions, the current terms~~ of our ~~debt~~outstanding ~~instruments and our subsidiaries’~~ debt ~~instruments permit us or them to incur additional indebtedness~~.

WeThese ~~expect~~risks tocould ~~periodically~~be ~~require~~exacerbated ~~financing,~~by ~~and~~changes wein ~~cannot~~economic ~~assure~~conditions, ~~you~~additional weborrowings, ~~will~~or becredit ~~able~~rating todowngrades. ~~obtain~~Subject ~~such~~to ~~financing~~certain onlimitations, ~~terms~~our ~~that~~existing ~~are~~debt ~~acceptable~~agreements topermit us, orand atour ~~all~~subsidiaries to incur additional indebtedness.

~~We expect to periodically require financing in the future to refinance existing indebtedness and potentially for other purposes.~~ Our ability to ~~arrange additional financing will depend on, among other factors, our financial position, performance, credit ratings, and debt covenants. Our ability to~~ obtain ~~additional~~future financing ~~could~~may ~~also depend on prevailing market conditions, which could~~ be ~~adversely affected by (i) general market conditions~~limited, such as disruptions in domestic or overseas sovereign or corporate debt markets, geo-political instabilities, trade restrictions, pandemics, weak economic conditions or other similar adverse economic developments in the U.S. or abroad, and ~~(ii)~~failure ~~specific conditions in the communications industry. Instability in the domestic or global financial markets has from time~~ to ~~time~~refinance ~~resulted in periodic volatility and disruptions in capital markets that have partially or severely limited the ability of leveraged companies like us to obtain~~ debt ~~financing.~~could ~~For~~adversely ~~these~~affect ~~and other reasons, we can give no assurance additional financing for any of these purposes will be available on terms acceptable to~~ us~~, or at all~~.

23We expect to periodically seek financing to refinance existing indebtedness and fund other needs. Our ability to secure additional financing depends on factors such as our financial position, performance, credit ratings, and debt covenants, and market conditions. Market conditions could be negatively affected by disruptions in global or domestic debt markets, geopolitical instability, trade restrictions, pandemics, weak economic conditions, or adverse developments in the communications industry. Periodic volatility and disruptions in capital markets have historically limited the ability of leveraged companies like ours to obtain debt financing. We cannot assure that additional financing will be available on acceptable terms, or at all.

If we are unable to make required debt payments or refinance our debt, we ~~would~~may ~~likely~~need ~~have~~ to consider ~~other~~alternatives ~~options,~~ such as selling assets, ~~cutting~~issuing oradditional ~~delaying~~debt ~~costs~~securities, ~~or otherwise~~ reducing ~~our~~or ~~cash~~delaying ~~requirements~~expenditures, or negotiating ~~with~~debt ~~our~~restructurings. ~~lenders~~However, toour ~~restructure~~and our ~~applicable~~affiliates debt. ~~The~~agreements ~~current~~ and ~~future~~market ~~debt~~conditions ~~instruments of us or our affiliates~~ may restrict, or ~~market or business conditions may~~ limit, our ability to ~~complete~~implement ~~some of~~ these actions on favorable terms, or at all. ~~For these and other reasons, we cannot assure you we could implement these steps in a sufficient or timely manner, or at all.~~ Even if ~~successfully~~ implemented, these ~~transactions~~measures could benegatively ~~detrimental~~affect to our operations, financial performance, or future prospects.

We are part of a highly complex debt structure, which could impact the rights of our investors.

Most of the debt of our subsidiary Level 3 Financing is ~~(i)~~ secured by ~~a pledge of~~ substantially all of its assets and ~~(ii)~~ guaranteed ~~on a secured basis~~ by certain ~~of its~~ affiliates. The remainder ~~of the debt of Level 3 Financing~~ is ~~not~~unsecured ~~secured by any of its assets,~~ but isstill guaranteed by certain ~~of its~~ affiliates, including us. Lumen Technologies, Inc. and ~~various~~certain of its subsidiaries owe ~~substantial~~significant ~~sums~~amounts ~~pursuant~~under to various debt ~~and financing~~ arrangements~~, certain of which are guaranteed by other principal subsidiaries~~. Roughly three-quarters of ~~the debt of~~ Lumen Technologies, Inc.’s debt is guaranteed by ~~certain of its~~ principal domestic subsidiaries, some of which have pledged substantially all of their assets (— including ~~certain~~the assets of their respective subsidiaries) — to secure their guarantees. The ~~remainder~~rest ~~of the debt of Lumen Technologies, Inc.~~ is neither guaranteed nor secured. Substantial ~~amounts of~~ debt ~~are~~is also owed by ~~two~~certain ~~direct or indirect~~ subsidiaries of Qwest Communications International Inc. Most of the ~~over 200~~ subsidiaries of Lumen Technologies, Inc. have neither borrowed ~~money~~funds nor guaranteed ~~any of the~~ debt ~~of Lumen Technologies, Inc~~. ~~or its affiliates.~~ As ~~such~~a result, ~~our investors should be aware that (i)~~ determining the priority of ~~the~~ rights ofamong holders of ~~the~~our consolidated debt instruments ~~of us and our affiliates~~ is a complex ~~matter~~and ~~which~~depends ison ~~substantially dependent upon~~ the assets and ~~earning~~earnings ~~power~~ of the ~~entities~~issuing ~~that issued~~ or ~~guaranteed~~guaranteeing ~~(if~~entities. ~~any)~~In ~~the~~addition, ~~applicable debt and (ii)~~ such debt is structurally subordinated to all liabilities of ~~the~~ non-guarantor subsidiaries ~~of Lumen Technologies, Inc.~~ to the extent of the value of those subsidiaries that are obligors.

~~Our~~Restrictive covenants and ~~our~~potential ~~affiliates'~~defaults ~~various~~under our debt agreements ~~include restrictions and covenants that~~ could ~~(i)~~materially ~~limit~~affect our ~~ability to conduct~~ operations ~~or borrow additional funds, (ii) restrict our ability to engage in inter-company transactions,~~ and ~~(iii) lead to the acceleration of our repayment obligations in certain instances~~liquidity.

Under our and our affiliates'’ consolidated debt and financing arrangements, the issuer of the debt is subject to various covenants and restrictions, with the most restrictive ofapplying ~~which pertain~~ to ~~the debt of~~ Lumen Technologies, Inc. and Level 3 Financing, Inc. These covenants limit our ability to incur additional debt or guarantees, pay dividends or other distributions to our equity holder, make loans, create liens, sell assets, transact with affiliates, or engage in mergers and other strategic transactions. These restrictions could materially impair our and our affiliates’ ability to operate, restructure our respective businesses, issue priority debt, or pursue acquisitions and other strategic initiatives.

Lumen Technologies, Inc.’s senior secured credit facilities and secured notes ~~contain~~also ~~several~~include ~~significant~~financial ~~limitations~~maintenance ~~restricting~~covenants. ~~the~~Our ~~ability~~agreements ofcontain itsubstantially ~~and~~similar ~~its~~limitations ~~subsidiaries~~and ~~to,~~treat ~~among~~it ~~other~~as ~~things,~~a ~~borrow~~separate ~~additional~~restricted ~~money~~group, orwhich ~~issue~~may ~~guarantees;~~significantly ~~pay~~restrict ~~dividends~~transactions ~~or other distributions to shareholders; make loans; create liens on assets; sell assets; transact~~ with ~~its~~Level ~~affiliates~~3 ~~and~~Parent, ~~engage in mergers~~LLC, ~~consolidations~~including orcash ~~other~~transfers ~~similar~~among ~~transactions~~affiliated entities. These restrictive covenants could have a material adverse impact on our ~~and our affiliates'~~ ability to operate or reconfigure our ~~respective businesses~~business, to issue additional priority debt, to pursue acquisitions, divestitures or strategic transactions, or to otherwise pursue our ~~respective~~ plans and strategies.

The debt and financing arrangements of Level 3 Financing contain substantially similar limitations that restrict our operations on a standalone basis as a separate restricted group. Consequently, certain of these covenants may significantly restrict our ability to distribute cash to other of our affiliated entities or to enter into other transactions among our wholly-owned entities.22

~~Lumen~~We ~~Technologies~~cannot assure you that we or our affiliates will be able to comply with these covenants. Failure to do so may result in an event of default, ~~Inc~~which could lead to the acceleration of substantial indebtedness, severely constrain our liquidity, and potentially force us to seek bankruptcy protection. ~~senior~~Because ~~secured~~certain ~~credit~~instruments ~~facilities~~include ~~contain~~cross-default ~~financial~~and ~~maintenance~~cross-acceleration ~~covenants~~provisions, a single default could trigger defaults across multiple agreements, significantly magnifying liquidity pressures.

~~The~~Due ~~failure of us or our affiliates~~ to ~~comply with~~ the ~~above-described~~complexity ~~restrictive or financial covenants could result in an event~~ of ~~default, which, if not cured or waived, could accelerate~~ our debt ~~repayment~~structure, ~~obligations.~~covenants ~~Any~~and ~~such~~operations, ~~acceleration~~we ofor our ~~debt~~affiliates ~~could~~ have ~~materially adverse consequences~~encountered, ~~including reducing the possibility of obtaining financing~~ and ~~potentially~~may ~~forcing~~in usthe tofuture ~~seek~~encounter, ~~bankruptcy~~disputes ~~protection.~~regarding ~~Certain of~~ our ~~debt~~covenant ~~instruments~~compliance ~~have~~which, ~~cross-default~~if ornot ~~cross-acceleration~~resolved ~~provisions.~~in ~~When~~our ~~present~~favor, ~~these~~may ~~provisions~~cause ~~could have~~ a ~~wider~~material ~~impact~~adverse ~~on liquidity than might otherwise arise from a default or acceleration of a single debt instrument~~effect.

In 2023, holders of a substantial portion of our funded indebtedness asserted that we had violated certain of our debt covenants. Other creditors could potentially seek to assert similar claims in the future, the risk of which is heightened by the complexity of our debt structure, debt covenants and operations.

Our recent debt transactions may not achieve their anticipated benefits.

During 2024, we engaged in a series of transactions designed principally to extend our debt maturities, and reduce our net indebtedness. In connection with announcing the closing of these transactions, we indicated that they would provide us with additional time to transform our operations and improve our financial performance.

In completing these transactions, we incurred substantial transaction expenses, agreed to pay higher levels of interest and committed to more restrictive debt covenants, which collectively could have important consequences, including the potentially adverse consequences of carrying significant debt or failing to comply with applicable debt covenants, each as specified elsewhere in this Item 1A. For all these reasons and more, we may not realize some or all of the benefits we anticipate receiving from completing our 2024 debt transactions.

Our cash flows may not adequately fund all of our cash requirements.

Our business is very capital intensive. We expect to ~~continue~~fulfill toobligations ~~require~~under ~~significant~~certain ~~capital~~PCF toagreements ~~perform~~and maintain, upgrade, and expand our network infrastructure and product offerings. These capital needs are influenced by factors such as:

~~buildout~~•evolving ~~obligations~~customer under certain of our PCF agreements and to otherwise maintain, upgrade and expand our network infrastructure and product offerings. These capital requirements are driven by several factors, including (i) changes in customers’ service requirements; (ii) our need to continue to maintain our infrastructure; (iii) our continuing need to expand and improve our network to remain competitive and meet customer demand; and (iv) our regulatory and contractual commitments. Any failure to make appropriate capital expenditures could adversely impact our financial performance or prospects. We will also continue to need substantial amounts of cash to meet our fixed commitments and other business objectives, including without limitation funding our debt repayments, interest expense, operating costs, maintenance expenses, tax obligations, periodic pension contributions and other benefits payments. Although our recent PCF agreements have significantly increased our near term liquidity, we cannot assure you our future cash flows from operating activities will be sufficient to fund our capital investments, debt obligations or any other long-term cash requirements.

We•the ~~rely~~need onto ~~payments~~maintain ~~from~~aging ~~our~~or ~~operating~~obsolete ~~companies~~infrastructure tountil ~~meet our obligations.~~replacement;

~~Because~~•ongoing ~~both~~investments we and Level 3 Financing are holding companies, substantially all of our income and operating cash flow is dependent upon the earnings of our respective subsidiaries and their distribution of those earnings to usenhance ~~in the form of dividends, loans or other payments. As a result, we rely upon~~ our ~~subsidiaries~~network to ~~generate~~remain ~~cash~~competitive ~~flows in amounts sufficient to fund our obligations, including the payment of our long-term debt. Our respective subsidiaries are separate~~ and ~~distinct~~meet ~~legal~~demand; ~~entities~~ and have no obligation to pay any amounts owed by us, except to the extent they have guaranteed such payments. Similarly, subject to limited exceptions for tax or cash management purposes, our non-guarantor subsidiaries have no obligation to make any funds available to us to repay our obligations, whether by dividends, loans or other payments. As discussed in greater detail elsewhere herein, restrictions imposed by credit instruments or other agreements applicable to Level 3 and certain of our other subsidiaries limit the amount of funds our subsidiaries are permitted to transfer to us, including the amount of dividends that may be paid to us. Moreover, our rights to receive assets of our respective non-guarantor subsidiaries upon their liquidation or reorganization will be effectively subordinated to the claims of creditors of that subsidiary, including trade creditors. In addition, the laws under which our subsidiaries were organized typically restrict the amount of dividends they may pay. The ability of our subsidiaries to transfer funds could be further restricted under applicable state or federal tax laws, regulatory orders or regulations. For all these reasons, you should not assume our respective subsidiaries will be able in the future to generate and distribute to us cash in amounts sufficient to fund our respective cash requirements.

We•regulatory ~~periodically~~and ~~transfer~~contractual ~~our cash to our controlling equity owner, which exposes us to certain risks~~commitments.

WeFailure ~~are~~to ~~controlled~~make bynecessary ~~Lumen~~capital ~~Technologies,~~expenditures could adversely affect our ~~ultimate~~financial ~~parent~~performance ~~company~~and prospects. In addition, we will require significant cash to meet fixed commitments and other objectives, including debt repayments, interest expense, operating costs, maintenance expenses, tax obligations, pension contributions, and other benefit payments. While recent PCF agreements have improved near-term liquidity, we cannot assure that future operating cash flows will be sufficient to fund capital investments, debt obligations, or other long-term cash requirements.

AsOur ofability ~~December~~to ~~31,~~meet ~~2024, Lumen Technologies owed us approximately $2.7 billion under~~ our ~~affiliate~~obligations ~~credit~~depends ~~facilities~~on ~~discussed~~cash ~~elsewhere~~flows infrom ~~this report. Developments that adversely impact Lumen Technologies could adversely impact~~ our ~~ability to collect this debt~~subsidiaries.

~~There~~Because we and Level 3 Financing are noholding ~~limitations~~companies, onsubstantially all of our income and operating cash flow is dependent upon the ~~ability~~earnings of ~~Level~~our 3respective ~~Financing~~subsidiaries toand ~~transfer~~their ~~assets~~distribution of those earnings to us in the form of dividends, ~~and~~loans or other payments. As a result, we ~~intend~~rely toupon ~~continue~~our subsidiaries to ~~distribute~~generate tocash ~~our~~flows ~~direct~~in ~~equity~~amounts ~~holder~~sufficient ato ~~substantial~~fund ~~portion~~our obligations, including the payment of our ~~consolidated~~long-term ~~cash~~debt. ~~flow~~Our respective subsidiaries are separate and distinct legal entities and, ~~thereby~~except ~~reducing~~where ~~our~~they ~~capital~~have ~~resources~~provided ~~for~~guarantees, ~~debt~~have ~~repayments~~no obligation to pay amounts owed by us or ~~other~~to ~~purposes~~make funds available for our use. ~~These~~Subject ~~and~~to ~~other~~limited ~~risks~~exceptions offor ~~investing~~tax inor ~~our~~cash ~~debt~~management ~~securities~~purposes, non-guarantor subsidiaries are ~~more~~not ~~fully~~required ~~described~~to inprovide ~~the~~us ~~disclosure~~with ~~documents~~cash ~~distributed~~through atdividends, ~~the~~loans, ~~time~~or ofother ~~issuance~~transfers.

25As discussed in greater detail elsewhere herein, restrictions under credit agreements, other contractual arrangements, and applicable laws limit the ability of certain subsidiaries to transfer funds to us. These restrictions include limitations on dividend payments. In addition, our rights to receive assets upon a subsidiary’s liquidation or reorganization are effectively subordinated to the claims of that subsidiary’s creditors, including trade creditors. Laws governing our subsidiaries generally restrict the amount of dividends they may pay, and future limitations could arise under tax laws, regulatory orders, or other regulations. For these reasons, you should not assume that our subsidiaries will be able to generate and distribute sufficient cash to meet our obligations.

We periodically transfer cash to our controlling equity owner, Lumen Technologies, which creates certain risks. Lumen Technologies currently owes us under affiliate credit facilities, and any adverse developments affecting Lumen could impact our ability to collect this debt. While Level 3 Financing can freely transfer assets to us, we plan to continue distributing a substantial portion of our consolidated cash flow to our equity holder, reducing funds available for debt repayment or other purposes. Additional risks related to investing in our debt securities are detailed in the disclosure documents distributed at the time of issuance.

We may not be able to fully utilize our NOLs.

AsWe ofhave ~~December 31, 2024, we had~~ substantial ~~gross~~ federal and state net operating loss carryforwards ("~~NOLs~~NOL"s),. ~~net~~Federal ofand ~~uncertain~~state tax ~~positions~~attributes, ~~some~~including ofNOLs, ~~which~~can ~~remain~~be subject to limitations under Section 382 of the Internal Revenue Code and related regulations ("Section 382") and similar state tax laws. These limitations could restrict our ability to use these NOLs under our separate return method in the amounts we project. In an effort to safeguard these NOLs, Lumen has maintained an NOL rights agreement which is scheduled to lapse in late 2026. AsOur ~~of December 31, 2024, we also had substantial~~ state NOLs ~~which we believe~~ are subject to legal and practical limitations on our ability to realize their full benefit. We cannot assure you we will be able to utilize ~~these~~our federal and state NOLs as projected or at all.

High inflation could continue to adversely impact us.

Although inflation has recently been declining, during the past several years our operations were impacted by the highest domestic inflation rates in decades. If inflation rates remain elevated or increase, our operations will likely continue to be impacted. Potential impacts of high inflation include (i) lower revenue if inflationary pressures cause our customers to defer or decrease their orders, (ii) lower profit margins, (iii) higher interest costs to the extent inflation places upwards pressure on prevailing interest rates and (iv) as noted above, potential difficulties retaining personnel if we do not match the salary increase expectations of our workforce.

Lapses in our disclosure controls and procedures or internal control over financial reporting could materially and adversely affect us.

We maintain ~~(i)~~ disclosure controls and procedures designed to provide reasonable assurances regarding the accuracy and completeness of our SEC reports and ~~(ii)~~ internal control over financial reporting designed to provide reasonable assurance regarding the reliability of our financial statements and their compliance with ~~U.S. generally accepted accounting principles (“~~GAAP”). We cannot assure you these measures will be effective. Any failure or deficiency in these controls could result in inaccurate disclosures, financial reporting errors, or noncompliance with SEC requirements, which could materially and adversely affect our reputation, financial condition, or results of operations.

We face other financial risks.

We face other financial risks, including among others the risk that:

•~~downgrades~~future inintangible ~~our~~asset ~~credit~~impairments ~~ratings~~could orresult ~~unfavorable~~in ~~financial~~significant ~~analyst~~non-cash ~~reports regarding us~~charges, ~~our~~reducing ~~affiliates~~earnings orand ~~our~~member's ~~industry~~equity ~~could~~and adversely ~~impact~~affecting ~~the liquidity or market prices of~~ our ~~outstanding~~financial ~~debt securities~~condition;

•persistent or rising inflation could adversely affect our business, potentially leading to lower customer demand, reduced profit margins, increased interest costs, and challenges in retaining personnel if wage expectations are not met;

•downgrades in our credit ratings or unfavorable financial analyst reports regarding us, our affiliates, or our industry could adversely impact the liquidity or market prices of our outstanding debt securities;

•higher prevailing interest rates would increase interest expense under our floating-rate debt;

•a change of control of us or certain of our affiliates could accelerate a substantial portion of our outstanding indebtedness in an amount that we might not be able to repay; and

•ongoing attempts of the ~~United~~U.S. ~~States~~Federal government, U.S. state and local governments, various foreign countries, and supranational or international organizations to reform taxes or identify new tax sources could materially impact our ~~taxes~~tax positions, orand ~~that~~ one or more of our ongoing tax audits or examinations could result in tax liabilities that differ materially from those ~~we have~~ recognized in our consolidated financial statements.

Divestiture Risks

We may benot ~~unable to~~ realize the anticipated benefits of our ~~2022~~completed ~~and 2023 divestitures~~divestiture.

In connection with divesting our ~~Latin American and~~ EMEA ~~businesses~~business in ~~2022 and~~ 2023, we completed internal restructurings and entered into multi-year agreements with the purchasers to provide certain transitional services and to provide or receive certain commercial services. It has been challenging and time-consuming to provide transition services, and we expect this will continue to be the case. Consequently, we may:

It•face ~~has been challenging and time-consuming to provide transition services to the purchasers of our divested operations, and we expect this will continue to be the case. We may experience (i)~~ disputes with ~~the~~ purchasers regarding the ~~nature~~scope ~~and~~or ~~sufficiency~~adequacy of ~~the~~ transition services ~~we provide~~ or the terms ~~and conditions~~ of our commercial agreements with the purchasers, (ii) greater tax or other costs or realize fewer benefits than anticipated under our post-closing agreements with the purchasers, (iii) higher vendor costs due to reduced economies of scale or other similar dis-synergies, (iv) weaker performance to the extent segregation and support of the divested businesses distracts personnel or diverts resources from the operation, digitization, and transformation of our retained business, (v) losses or increased inefficiencies from stranded or underutilized assets, (vi) the loss of any customers dissatisfied with our services post-closing, (vii) challenges in retaining and attracting personnel or (viii) operational or commercial difficulties segregating the divested assets from our retained assets.;

~~The~~•incur ~~divestitures~~greater ~~have~~costs ~~reduced~~or ~~our~~fewer ~~cash~~benefits ~~flows.~~than Ifanticipated ~~our~~under ~~remaining~~post-closing ~~business fails to perform as expected~~agreements, ~~the~~including ~~divestitures~~tax ~~could~~or ~~exacerbate certain of the~~ other ~~financial risks specified in this Item 1A, including our ability to fund all of our current cash requirements.~~expenses;

~~General Risk Factors~~24

•experience increased vendor costs due to reduced economies of scale and other dis-synergies;

•encounter operational distractions as segregation and support of divested businesses divert resources from the operation, digitization, and transformation our retained business;

•sustain losses or inefficiencies from stranded or underutilized assets;

•lose customers dissatisfied with post-closing services;

•face talent challenges, including difficulty retaining or attracting personnel; and

•experience operational challenges separating divested assets from retained assets.

Divestitures may not yield the expected benefits. We could incur greater tax or other costs, realize fewer benefits under the purchase agreement and related post-closing arrangements, or face operational challenges separating divested assets from retained assets. We may experience losses from stranded or underutilized assets, reduced future cash flows, and dis-synergies. We may not realize the expected proceeds, cash flows, or strategic benefits on the anticipated timeline or in the amounts projected. In addition, we remain subject to ongoing obligations and liabilities, including indemnification obligations, which could continue to divert resources and adversely affect our financial condition and results of operations. The 2023 divestiture has reduced our cash flows. If our remaining business underperforms, these effects could exacerbate other financial risks described elsewhere in this section, including our ability to meet cash requirements.

General Risks

Changes in government trade policies could adversely affect our business.

Changes in U.S. or foreign government policies may result in modifications to existing trade agreements, the imposition of new tariffs, or significant increases in existing tariffs on goods imported into the U.S., as well as retaliatory measures by foreign governments. The U.S. presidential administration has implemented or increased tariffs and signaled its intent to impose additional tariffs, but future actions by U.S. or foreign governments remain uncertain. A trade war or other governmental actions related to tariffs or trade agreements, as well as changes in social, political, regulatory, or economic conditions or laws governing foreign trade, manufacturing, development, and investment in countries where we operate, could negatively impact our business. In addition, any resulting negative sentiment toward the U.S. could further harm our operations, financial condition, or results of operations.

Unfavorable general economic, societal, health or environmental conditions could negatively impact us.

Unfavorable general economic, societal, health or environmental conditions, including unstable economic and credit markets, or depressed economic activity caused by trade wars, epidemics, pandemics, wars, societal unrest, rioting, civic disturbances, natural disasters, terrorist attacks, environmental disasters, government shutdowns, political instability or other factors, could negatively affect our business or operations in a variety of ways.

Shareholder or debtholder activism efforts could cause a material disruption to our business.

While we ~~always~~value ~~welcome~~ constructive input from our stakeholders, activist shareholders at the Lumen level may ~~from~~at ~~time~~times topursue ~~time engage in~~ proxy solicitations, submit shareholder proposals, or otherwise ~~attempt~~seek to ~~effect~~influence ~~changes~~our strategy or ~~acquire~~gain control over Lumen and its affiliates, including us. Responding to ~~these~~such actions can be costly, ~~and~~ time-consuming, and ~~may~~disruptive ~~disrupt~~to ~~Lumen’s~~operations ~~and~~of ~~our~~Lumen ~~operations~~ and ~~divert~~us, diverting the attention of our Board of Directors and management from day-to-day operations. These ~~adverse~~ impacts ~~could~~may be ~~intensified~~heightened if activist shareholders advocate actions that ~~are~~lack ~~not~~broad ~~supported by other shareholders~~shareholder, ~~Lumen’s~~ Board, or management support. ~~The~~In ~~recent~~addition, ~~increase in~~ the ~~activism~~recent ofrise in debtholders could increase the risk of claims ~~being made~~ under ~~the~~ debt agreements ~~of us or our affiliates~~.

2725

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 1C. CYBERSECURITY

Risk Management and Strategy

As a technology and communications company that globally transmits large amounts of information over our networks, we recognize the critical importance of maintaining the ~~security~~confidentiality, integrity, and ~~integrity~~availability of information and systems under our control. WeOur ~~view~~ cybersecurity risk asmanagement ~~one~~program ofis integrated into our ~~principal~~overall enterprise~~-wide~~ ~~risks~~risk management program, ~~subject~~and toshares ~~control~~common ~~and~~methodologies, ~~monitoring~~reporting atchannels ~~various~~and ~~levels~~governance ofprocesses ~~management~~that ~~throughout~~apply across the ~~Company~~enterprise program to other key risk areas. We dedicate significant resources towards programs designed to identify, assess, manage, mitigate and respond to cybersecurity threats.

AsTo ~~described~~identify, inassess ~~Item~~and 1Amitigate ~~“Risk~~cybersecurity ~~Factors~~risk,” ~~several~~we ~~features~~have ofimplemented ~~our~~a ~~operations~~global ~~heighten~~information ~~our~~security ~~susceptibility~~management toprogram ~~cyber-attacks,~~that ~~including~~includes ~~(i)~~administrative, ~~our material reliance on systems owned~~technical, ~~operated or controlled by unaffiliated third-party operators~~ and ~~(ii)~~physical ~~our processing and storage of large amounts of sensitive customer data~~safeguards. ~~Cyber-attacks~~This onprogram ~~our~~seeks ~~systems~~to ~~may be initiated by a wide variety of intruders~~identify, ~~including employees~~detect, ~~cyber-criminals,~~protect ~~nation state actors and other advanced persistent threat actors~~against, and ~~may~~respond ~~include~~to ~~attempts~~threats ~~by outside parties~~ to ~~gain~~our ~~access~~information tosystems. ~~sensitive~~Our ~~data~~security ~~that~~operations iscenter ~~stored~~provides inadvanced orthreat ~~transmitted~~detection ~~across~~and ~~our~~response ~~network~~capabilities. ~~Cyber-attacks~~Lumen ~~can~~maintains ~~take~~an ~~many~~insider ~~forms,~~threat ~~including~~program ~~computer~~to ~~hackings~~detect, ~~computer~~investigate ~~viruses,~~and ~~ransomware,~~mitigate ~~worms~~insider orthreat ~~other~~risks ~~destructive~~to orLumen ~~disruptive software~~assets, ~~denial of service attacks~~data, orservices ~~other~~and ~~malicious~~personnel ~~activities~~globally.

ToOur ~~identify,~~cybersecurity ~~assess~~ and ~~mitigate~~privacy ~~cybersecurity~~policies ~~risk~~encompass information security, weincident ~~have~~response ~~implemented~~procedures, aand ~~global~~vendor ~~information~~management. ~~security~~Our risk management ~~program~~team ~~that~~works ~~includes~~closely ~~administrative~~with our information technology, ~~technical~~privacy, product, and ~~physical~~operations ~~safeguards.~~departments ~~This~~to continuously evaluate emerging cyber risk as part of our overall risk management program. ~~seeks~~We tomonitor ~~identify,~~existing ~~detect~~or proposed cybersecurity and privacy laws, ~~protect~~regulations and ~~respond~~guidance tothat ~~threats~~are or may be applicable to ~~our~~us ~~information~~in ~~systems.~~the ~~Our~~regions ~~security~~where ~~operations~~we ~~center~~operate, ~~provides~~including ~~advanced~~in ~~threat~~the ~~detection~~European Union and ~~response~~the ~~capabilities.~~United ~~Lumen~~Kingdom ~~maintains~~where anwe ~~insider~~are ~~threat~~subject ~~program~~ to ~~detect~~the GDPR, ~~investigate~~as ~~and~~well ~~mitigate~~as ~~insider~~various ~~threat~~other ~~risks~~laws togoverning ~~Lumen~~privacy ~~assets~~rights, data, ~~services~~protection and ~~personnel~~cybersecurity ~~globally~~in other regions. As a U.S. government contractor we are required to comply with extensive governmental regulations and standards regarding cyber security.

~~Our~~Lumen ~~cybersecurity~~periodically ~~and~~engages ~~privacy~~both ~~policies~~internal ~~encompass~~and ~~information~~external ~~security,~~auditors ~~incident response procedures,~~ and ~~vendor~~consultants ~~management.~~to ~~Our~~assess ~~risk~~and ~~management~~enhance ~~team works closely with~~ our ~~information~~program ~~technology, privacy, product,~~ and ~~operations departments~~ to ~~continuously~~assist ~~evaluate~~in ~~emerging~~responding ~~cyber~~to ~~risk~~cybersecurity incidents. WeMany ~~monitor~~of ~~existing~~these orindependent ~~proposed~~external ~~cybersecurity~~auditors and ~~privacy~~consultants ~~laws,~~are ~~regulations~~accredited ~~and~~under ~~guidance~~various ~~that~~information ~~are~~security orstandards, ~~may~~including bethose ~~applicable~~administered toby usthe inInternational ~~the~~Organization ~~regions~~for ~~where~~Standardization weand ~~operate,~~the ~~including~~PCI inSecurity ~~the~~Standards ~~European~~Council. ~~Union~~These ~~and~~engagements ~~the~~typically ~~United~~include ~~Kingdom~~penetration ~~where~~testing, wethird-party ~~are~~certifications, ~~subject~~compliance toassessments, ~~the~~audits, ~~General~~and ~~Data~~assessments ~~Protections~~of ~~Regulations~~vulnerabilities ~~("GDPR")~~and emerging threats, as well as ~~various~~digital ~~other~~forensics ~~laws~~and ~~governing~~related ~~privacy~~work. ~~rights,~~We ~~data~~also ~~protection~~periodically ~~and~~deploy ~~cybersecurity~~our inInternal ~~other~~Audit ~~regions.~~processes Asto aconduct ~~U.S.~~additional ~~government~~reviews ~~contractor~~and weassessments. ~~are~~We ~~required~~also tomutually ~~comply~~exchange threat intelligence with ~~extensive~~government ~~governmental~~agencies, ~~regulations~~cyber ~~and~~analysis ~~standards~~centers ~~regarding~~and ~~cyber~~cybersecurity ~~security~~associations.

~~Lumen~~As ~~periodically~~noted ~~engage~~elsewhere ~~both~~in ~~internal~~this ~~and~~annual ~~external~~report, ~~auditors~~we ~~and~~are ~~consultants~~materially toreliant ~~assess~~on ~~and~~a ~~enhance~~variety ~~our~~of ~~program.~~third-party ~~These~~service ~~independent~~providers ~~external~~to ~~auditors~~operate ~~and~~our ~~consultants~~business, ~~are~~which ~~accredited~~exposes ~~under~~us ~~various~~to ~~information~~the ~~security~~risk ~~standards,~~of ~~including~~cyber ~~those~~incidents ~~administered~~impacting bythose ~~the~~providers’ ~~International~~systems. ~~Organization~~We ~~for~~have ~~Standardization~~a ~~and~~vendor ~~the~~risk ~~PCI~~management ~~Security~~program ~~Standards~~that ~~Council.~~assesses, ~~These~~manages ~~engagements~~and ~~typically~~oversees ~~include~~risks ~~penetration~~associated ~~testing,~~with third-party ~~certifications,~~service ~~compliance~~providers ~~assessments,~~who ~~audits,~~have ~~and~~access ~~assessments~~to ofour ~~vulnerabilities~~data and ~~emerging threats~~systems. We ~~also~~engage ~~periodically~~in ~~deploy~~diligence, ~~our~~contracting ~~Internal~~or ~~Audit~~maintain ~~processes~~ongoing tomonitoring ~~conduct~~for ~~additional~~compliance ~~reviews~~with ~~and~~our ~~assessments.~~cybersecurity Westandards, ~~also~~depending ~~mutually~~on ~~exchange~~our ~~threat~~assessment ~~intelligence~~of ~~with~~each ~~government~~provider's ~~agencies,~~operational ~~cyber~~criticality ~~analysis centers~~ and ~~cybersecurity~~risk ~~associations~~profile.

AsDespite ~~noted~~our ~~elsewhere~~efforts into ~~this~~manage ~~annual~~cybersecurity ~~report,~~risks weand ~~are~~prevent ~~materially~~security ~~reliant~~incidents, on(i) asome ~~variety~~ of ~~third-party~~these ~~service~~attacks ~~providers~~have toresulted ~~operate~~in ~~our~~security ~~business,~~incidents ~~which~~(although ~~exposes~~thus usfar towe ~~the~~do ~~risk~~not believe that any of ~~cyber~~these incidents ~~impacting~~has ~~those~~resulted ~~providers’~~in ~~systems.~~or Weis ~~have~~reasonably likely to result in a ~~vendor~~material ~~risk~~adverse ~~management~~effect ~~program~~on ~~that~~our ~~assesses~~business strategy, ~~manages~~operating results, or financial condition) and ~~oversees~~(ii) ~~risks~~future ~~associated~~security ~~with~~incidents ~~third-party~~are ~~service~~likely ~~providers~~(some ~~who~~of which could have ~~access~~a tomaterial adverse effect on our ~~data~~operating ~~and~~results ~~systems~~or financial condition). WeSee ~~maintain~~“Risk ~~ongoing~~Factors” ~~monitoring~~in toItem ~~ensure~~1A ~~their~~for ~~compliance~~a ~~with~~further ~~our~~discussion of cybersecurity ~~standards.~~risks and how they have affected or may affect us.

Despite our efforts to prevent security incidents, (i) some of these attacks have resulted in security incidents (although thus far we do not believe that any of these incidents has resulted in a material adverse effect on our operating results or financial condition) and (ii) future security incidents are likely (some of which could have a material adverse effect on our operating results or financial condition). See Item 1A “Risk Factors” for a further discussion of cybersecurity risks.26

28Lumen maintains an Incident Response Playbook that provides a set of guidelines for our stakeholders to follow when handling any data incident. This playbook describes how we assess incidents and how our security team shares information about such incidents with others at Lumen, including senior leadership and, if warranted, with some or all members of its Board of Directors (the "Board"). These escalation provisions, together with our disclosure controls and procedures, are designed to facilitate appropriate representatives throughout the Company in their assessment of relevant incidents and any necessary public notifications.

Lumen's ~~maintains~~Cybersecurity an Incident Response ~~Playbook~~Team ~~that~~(“CIRT”) ~~provides~~is aresponsible ~~set~~for ofdetecting ~~guidelines~~and ~~for~~coordinating ~~our~~responses ~~stakeholders~~ to ~~follow~~appropriate ~~when~~security ~~handling any data incident~~incidents. This ~~Playbook~~team ~~describes~~regularly ~~how~~assesses weits ~~assess~~internal ~~incidents~~communication plan and ~~how~~meet ~~our~~as ~~security~~a team ~~shares~~to ~~information~~discuss ~~about~~response ~~such~~options. ~~incidents~~The ~~with~~CIRT ~~others~~also ataddresses ~~Lumen,~~each ~~including senior leadership and~~incident, ifunless ~~warranted,~~it ~~with~~determines ~~some~~that oran ~~all~~incident ~~members~~is ofsufficiently ~~its Board of Directors~~serious. ~~These~~In ~~escalation~~those ~~provisions~~instances, ~~together~~it ~~with~~notifies ~~Lumen's~~our ~~Disclosure~~Cyber ~~Controls~~Security ~~and~~Watch ~~Procedures~~Team ("CSWAT"), ~~are~~which ~~designed~~is toresponsible ~~ensure~~for ~~that~~addressing ~~appropriate~~cybersecurity ~~representatives throughout the Company are available to assess how to respond to such~~ incidents ~~and~~that ~~make~~raise ~~any~~more ~~necessary~~significant ~~public notifications~~risks.

Our ~~Cybersecurity~~CSWAT ~~Incident~~comprises ~~Response~~senior ~~Team~~IT, ~~(“CIRT”)~~operations, isrisk, ~~responsible~~legal ~~for detecting~~ and ~~coordinating~~compliance ~~responses~~leaders toacross ~~security~~our ~~incidents~~business. ~~This~~In ~~team~~addition ~~regularly~~to ~~assesses~~addressing ~~its~~our ~~communication~~more ~~plan~~significant tocyber ~~confirm~~incidents, ~~that~~the ~~its~~CSWAT ~~members~~manages ~~can~~risks befrom ~~alerted~~matters ~~quickly~~related into ~~the~~business ~~event~~continuity, ofincluding anrisks ~~actual~~posed ~~crisis~~by ~~and~~cybersecurity ~~meet~~threats, asand aimplements ~~team~~controls to ~~discuss~~mitigate ~~response~~such ~~options~~operational risks. ~~The~~Among ~~CIRT~~other ~~also addresses each incident~~processes, ~~unless~~this itteam ~~determines~~reviews ~~that~~our anprograms ~~incident~~and isprocesses ~~sufficiently~~related ~~serious.~~to Ininformation ~~those instances~~security, itthird-party ~~will~~risk, ~~notify~~vendor ~~our~~management, ~~Cyber~~facilities, ~~Security~~unplanned ~~Watch Team~~downtime, ~~which~~business isdisruption, ~~responsible~~business ~~for~~continuity ~~addressing~~and ~~cybersecurity~~disaster ~~incidents that raise more significant risks~~recovery.

Our Cyber Security Watch Team (“CSWAT”) is comprised of senior IT, operations, risk, legal and compliance leaders across business segments. In addition to addressing our more significant cyber incidents, the CSWAT manages risks from matters related to business continuity, including risks posed by cybersecurity threats, and implements controls to mitigate such operational risks. Among other processes, this team reviews the our programs and processes related to information security, third-party risk, vendor management, facilities, unplanned downtime, business disruption, business continuity and disaster recovery.

Governance

As part of our overall risk management approach, Lumen prioritizes the identification and management of cybersecurity risk at several levels, including oversight by Lumen's Board ~~of Directors~~, executive commitment, and employee training. Lumen's Risk and Security Committee, ~~comprised~~comprising of independent directors from its Board, assists the Board in overseeing our cybersecurity and data privacy risk. Specifically, the Risk and Security Committee, which meets quarterly, (i) receives periodic reports from Lumen's Chief Security Officer (“CSO”) on security programs, including incident reports, (ii) reviews cybersecurity risk assessments from information security, privacy, and internal audit management teams, including the adequacy and effectiveness of ~~the Company~~Lumen’s internal controls regarding cybersecurity; (iii) reviews emerging cybersecurity developments and threats; (iv) reviews compliance with applicable laws and industry standards; and (v) periodically reviews our strategy to mitigate cybersecurity risks, such as our cyber insurance coverage and contingency plans in the event of security incidents or other system disruptions. At least quarterly, the Risk and Security Committee provides reports to the full Board regarding matters recently discussed by the Committee, which enables the full Board ~~of Directors~~ to provide additional oversight of our cyber risks and cyber processes. The full Board also reviews our cybersecurity risks in connection with its annual review of our enterprise risk mitigation programs.

Lumen's CSO has extensive experience working in the public and private sectors leading security organizations, managing risk ~~management~~ functions, and driving large information technology deployments. He has an Engineering degree, a Master of Business Administration, a Chief Information Security Officer Certification, and a Global Information Assurance Certification Security Leadership Certification. He oversees the implementation and compliance of our information security standards and ~~mitigation~~is ofprimarily responsible for managing our processes to assess and mitigate information security related risks.

Lumen's cybersecurity organization includes a response team and management-level committees who support our processes to assess and manage cybersecurity risk as follows:

•At the day-to-day operational level, we maintain an experienced information security team who are tasked with implementing our privacy and cybersecurity program and support the CSO in implementing our detection, reporting, security and mitigation functions. This team and the CSO work to develop and implement tools and processes designed to assist in identifying, containing and remediating cybersecurity incidents, and periodically retain consultants to assist with these activities. We generally seek to promote a company-wide awareness of cybersecurity risk through broad-based communications and educational initiatives, including regularly conducting phishing tests and holding employee trainings on our privacy, cybersecurity and information management policies, at least annually and more frequently when legal or other developments warrant.

2927

•The Technology, Security, and Privacy Council, co-chaired by the CSO, the Chief Information Officer (CIO), and the Chief Privacy Officer (CPO), leverages the combined expertise of various security, IT, legal, internal audit, and operational leaders across the company. This council provides a forum for these cross-functional members of management of our leadership team to consider emerging technologies, such as artificial intelligence and emerging cybersecurity risks; review cybersecurity and privacy regulations; review and update policies and standards as appropriate; and promote cross-functional collaboration to manage cybersecurity and privacy risks across the enterprise. Members of this council are responsible for reporting on cybersecurity and privacy risks to the Risk Oversight Committee (“ROC”).

•The ROC, whose core members include ~~the~~our ~~CFO,~~ Chief ~~Technology~~Financial Officer, Chief Technology and Product Officer, Executive Vice President of Enterprise Operations, and Chief Legal Officer, oversees our company-wide risk mitigation strategies. With respect to cyber risks, the ROC's oversight function helps to ensure accountability, adequacy of resourcing, implementation of Company directives, and alignment of oversight provided by the Board ~~of Directors~~ and senior leadership team. Some of the more significant risks discussed by the ROC are also reported to Lumen's Risk and Security Committee at least quarterly.

ITEM 2. PROPERTIES

Our property, plant and equipment consists principally of ~~land~~fiber-optic and metallic cables, ~~fiber~~high-speed transport equipment, ~~conduit~~electronics, ~~and~~switches, ~~other~~routers, ~~outside~~gateway ~~plant~~and transmission facilities, central office equipment, land and ~~other~~buildings ~~network~~related ~~electronics~~to ~~and~~our ~~support~~operations. Substantial portions of these assets. ~~Our~~are ~~gross~~pledged ~~property,~~as ~~plant~~collateral ~~and~~to ~~equipment~~secure ~~consisted~~the long-term debt of ~~the~~Level ~~following~~3 ~~components~~Financing, asInc. ofor the ~~dates~~obligations ~~below:~~of its affiliate guarantors of such debt.

	As of December 31,
	2024		2023
Land	2	%	2	%
Fiber, conduit and other outside plant (1)	39	%	40	%
Central office and other network electronics (2)	32	%	31	%
Support assets (3)	19	%	20	%
Construction in progress (4)	8	%	7	%
Gross property, plant and equipment	100	%	100	%

Our gross property, plant and equipment consisted of the following components as of the dates below:


	December 31,
	2025		2024
Land	1	%	2	%
Fiber, conduit and other outside plant (1)	36	%	39	%
Central office and other network electronics (2)	30	%	32	%
Support assets (3)	18	%	19	%
Construction in progress (4)	15	%	8	%
Gross property, plant and equipment	100	%	100	%

_______________________________________________________________________________

(1)Fiber, conduit and other outside plant consists of fiber and metallic cable, conduit, poles and other supporting structures.

(2)Central office and other network electronics consists of circuit and packet switches, routers, transmission electronics and electronics providing service to customers.

(3)Support assets consist of buildings, data centers, computers and other administrative and support equipment.

(4)Construction in progress includes inventory held for construction and property of the aforementioned categories that ~~is under construction and~~ has not ~~yet~~ been placed in service as it is still under construction.

We own or lease properties tothat house and operate our fiber optic backbone, ~~and~~ distribution network facilities, ~~our~~ point-to-point distribution capacity, ~~as well as our~~ switching equipment, and connecting lines between other carriers’ equipment and facilities and the equipment and facilities of our customers. Our ~~Gateway~~gateway facilities are designed to house local sales ~~staff,~~and ~~operational~~operations ~~staff~~teams, ~~our~~ transmission and IP routing/switching ~~facilities~~systems, and technical space tofor ~~accommodate~~ colocation of equipment by high-volume Level 3 customers. WeIn total, we operate approximately 7 million square feet of space for our ~~Gateway~~gateway and technical or transmission facilities.

The carrying amount of our net property, plant and equipment was approximately $9.0 billion and $7.6 billion as of December 31, 2025 and 2024, respectively. For additional information, see Note 9 — Property, Plant and Equipment in Item 8.

We have entered into various agreements regarding our unused office and technical space to reduce our ongoing operating expenses regarding such space.

~~Substantial portions of our property, plant and equipment are pledged to secure the long-term debt of Level 3 Financing, Inc. or the obligations of the affiliate guarantors of such debt.~~28

ITEM 3. LEGAL PROCEEDINGS

~~For~~The information ~~regarding~~contained ~~legal~~under ~~proceedings~~the insubheadings ~~which~~"Latin weAmerican ~~are~~Tax ~~involved~~Litigation and Claims," ~~see~~"Huawei Network Deployment Investigations," and "Other Proceedings, Disputes and Contingencies" in Note 16 — Commitments, Contingencies and Other Items ~~to our consolidated financial statements included~~ in Item 8 ofis ~~Part~~incorporated IIherein ofby ~~this report~~reference.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

3129

Part II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

~~Not~~We ~~Applicable~~have one equity holder, whose equity interest is not publicly traded.

ITEM 6. [Reserved]

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

References ~~in this report~~ to “Level 3 Communications, Inc.,” "Level 3," “we,” “us,” "its," the “Company” and “our” refer to Level 3 Parent, LLC and its consolidated subsidiaries and references to "Lumen Technologies" or "Lumen" refer to our ultimate parent company, Lumen Technologies, Inc. and its consolidated subsidiaries, in each case unless the context otherwise provides.

~~All~~Management’s ~~references~~Discussion toand ~~"Notes"~~Analysis inof ~~this~~Financial ~~Item~~Condition 7and Results of ~~Part~~Operations II(“MD&A”) ~~refer~~provides toan overview of our financial performance, liquidity, and the ~~Notes~~business environment in which we operate. This discussion is intended to ~~Consolidated~~help ~~Financial~~readers ~~Statements~~understand our results and key factors influencing our operations. The MD&A should be read together with our audited consolidated financial statements and accompanying notes included in Item 8. ofAll ~~Part~~references IIto of“Notes” in this ~~report~~section refer to the Notes to Consolidated Financial Statements in Item 8.

~~Certain~~This ~~statements~~section inincludes ~~this report constitute~~ forward-looking statements. ~~See~~that ~~"Special~~involve ~~Note~~risks ~~Regarding~~and ~~Forward-Looking~~uncertainties. ~~Statements"~~Actual ~~immediately~~results ~~prior~~may todiffer ~~Item 1~~materially offrom ~~Part~~those Iexpressed ofor ~~this~~implied. ~~report~~For ~~for~~a ~~factors~~discussion ~~relating~~of to these ~~statements~~risks, ~~and~~see ~~"Risk~~“Special ~~Factors"~~Note inRegarding ~~Item 1A~~Forward-Looking ofStatements” ~~Part~~immediately Iprior ~~of this report for a discussion of certain risk factors applicable~~ to ~~our~~Item ~~business,~~1 ~~financial~~and ~~condition,~~“Risk ~~results~~Factors” ofin ~~operations,~~Item ~~liquidity or prospects~~1A.

~~Overview~~The MD&A generally discusses results for the years ended December 31, 2025 and 2024, including year-over-year comparisons between these periods. For discussions of 2023 results and comparisons between 2024 and 2023 that are not in this document, refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7 of Part II of our Annual Report on Form 10-K for the year ended December 31, 2024. We reclassified certain prior period amounts to conform to the current period presentation, including the recategorization of our revenue by product category for 2024 and 2023.

We are a networking company with the goal of connecting people, data and applications quickly, securely and effortlessly. We are unleashing the world's digital potential by providing broad array of integrated products and services to our domestic and global business customers.OVERVIEW

~~For~~We ~~the~~are ~~reasons~~a ~~noted~~leading digital networking services company, empowering enterprise businesses to fuel growth in ~~Note~~a ~~1—Background~~multi-cloud, AI-first marketplace by connecting people, data, and ~~Summary~~applications ofquickly, ~~Significant~~securely, ~~Accounting~~and ~~Policies~~effortlessly. weWe ~~have~~operate ~~determined~~in a rapidly evolving landscape with growing demand for secure, high-speed connectivity. Our strategy focuses on growing and transforming our network and business to deliver next-generation solutions that wemeet ~~have~~these ~~one~~needs ~~reportable~~and ~~segment~~build the backbone of the AI economy.

~~Divestitures~~Reporting ~~of the Latin American and EMEA Businesses~~Segment

OnFor ~~August 1,~~the ~~2022,~~reasons ~~certain~~noted ofin ~~our~~Note ~~affiliates~~1 ~~sold~~— ~~our~~Background ~~Latin~~and ~~American~~Summary ~~business to an affiliate~~ of aSignificant ~~fund~~Accounting ~~advised~~Policies, bywe ~~Stonepeak~~have ~~Partners~~determined LPthat inwe ~~exchange~~have ~~for~~one ~~pre-tax~~reportable ~~cash proceeds of approximately $2~~segment.~~7 billion.~~

OnProducts November 1, 2023, affiliates of Level 3 Parent, LLC completed the sale of its operations in EMEA business to Colt Technology Services Group Limited, a portfolio company of Fidelity Investments, for pre-tax cash proceeds of $1.7 billion after certain closing adjustments and ~~transaction costs. This consideration is further subject to certain indemnities set forth in the Purchase Agreement, as amended and supplemented to date.~~Services

~~For~~Our ~~more~~products ~~information,~~and ~~see~~services ~~(i)~~are ~~Note~~currently ~~2—Divestitures~~organized ofto ~~the~~reflect ~~Latin~~product ~~American~~life cycles and ~~EMEA~~our ~~Businesses~~go to ~~our~~market ~~consolidated~~approach. ~~financial~~Revenue ~~statements~~is inreported ~~Item~~under 8four ofproduct ~~Part~~categories: IIGrow, ofNurture, ~~this~~Harvest, ~~report~~ and ~~(ii)~~Other. ~~the~~Revenue ~~risk~~from ~~factors~~products ~~included~~and inservices ~~Item~~provided 1Ato ofour ~~Part~~affiliates Iis ofreported ~~this~~under ~~report~~Affiliate Services.

~~Macroeconomic~~From ~~Changes~~time to time, we may change the categorization of our products and services. For more information, see "Products and Services" in Item I and Note 4 — Revenue Recognition in Item 8.

~~Over the past few years macroeconomic changes have impacted us and our customers in several ways.~~ 30

WeCurrent ~~believe~~Business ~~macroeconomic~~Environment ~~changes over the past few years have resulted in (i) increases in certain revenue streams~~ and ~~decreases~~Macroeconomic 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. Factors

32The macroeconomic environment in which we operate remains dynamic and continues to affect our business. Key factors that have impacted us and our customers include:

~~Continued~~•Revenue ~~business~~mix: ~~uncertainty,~~Shifts ~~supply~~in ~~constraints~~technology orand ~~inflationary~~economic ~~pressures~~conditions ~~could~~have ~~materially~~driven ~~impact~~us ~~our~~to ~~financial~~continuously ~~results~~review inour astrategy ~~variety~~and ofas ~~ways~~such, ~~including~~we byexpect ~~increasing~~to ~~our~~see ~~expenses,~~continued ~~decreasing~~reduction ~~our~~in ~~revenues~~legacy voice, ~~further~~broadband, ~~delaying~~and ~~our~~other ~~network~~legacy ~~expansion~~services, ~~plans~~while orfueling ~~otherwise~~growth ~~interfering~~in ~~with~~ our ~~ability~~strategic ~~to deliver~~ products ~~and services~~.

~~These~~•Inflationary ~~above-mentioned~~pressures ~~macroeconomic~~and ~~factors,~~build ~~coupled~~costs: ~~with~~Rising ~~dis-synergies~~costs ~~resulting~~for ~~from~~labor, ~~our~~materials, ~~2022~~ and ~~2023~~energy ~~divestitures,~~have ~~changes~~increased inoperating ~~customer~~expenses ~~preferences~~ and ~~negotiations~~capital ~~with our creditors through the end of the first quarter of 2024~~expenditures, ~~placed~~particularly ~~additional~~to ~~pressures~~support on our ~~financial~~continued ~~performance~~PCF ~~and~~buildout ~~Lumen's market capitalization. These developments contributed to us fully impairing our goodwill~~ and ~~recognizing~~other anetwork ~~total of approximately $6~~transformations.~~6 billion in goodwill impairment charges in 2022 and 2023.~~

•Supply constraints: Shortages of critical components and other materials have slowed certain network expansion efforts.

•Customer behavior: Certain customers have delayed purchasing decisions, which has occasionally impacted sales cycles.

To date, we do not believe these factors have materially impacted our financial performance or position. However, ongoing economic and geopolitical uncertainty, tariffs, inflation, and supply constraints could increase costs, reduce revenues, delay network expansion, or disrupt service delivery, which could materially impact our results. If these conditions persist, our projected cash flows and market capitalization could decline. For further information relating to these matters, see “— Trends Impacting Our Operations” below and "Risk Factors" in Item 1A.

We are actively managing these challenges through disciplined capital allocation, cost optimization, and strategic investments in network infrastructure. We believe these actions position us to navigate current macroeconomic conditions while pursuing long-term growth opportunities.

We expect continued demand for high-capacity, low-latency connectivity solutions, supported by enterprise digital transformation and government broadband programs. While macroeconomic uncertainty and competitive pressures present risks, we believe our transformation initiatives position us to deliver long-term value.

Trends Impacting Our Operations

InOur ~~addition~~operations toare ~~the~~shaped ~~above-described~~by ~~impact~~evolving oftechnology, ~~macroeconomic~~customer ~~pressures~~expectations, ~~our~~and ~~consolidated~~market ~~operations~~dynamics. ~~have~~Key ~~been~~trends that impact us, and will continue to beimpact us, ~~impacted by the following trends~~include:

•~~Customers'~~Automation and digital innovation: Growing demand for automated ~~products~~experiences and ~~services~~advanced ~~and~~technologies ~~competitive~~like ~~pressures~~AI ~~will~~and ~~require~~multi-cloud ~~that~~platforms werequires ~~continue~~ongoing toinvestment ~~invest~~ in ~~new~~technology ~~technologies~~ and ~~automated~~infrastructure ~~processes~~ to ~~improve~~enhance ~~the~~service ~~customer~~quality ~~experience~~ and reduce ~~our operating expenses~~costs.

•~~The~~Legacy ~~increased~~decline ~~use of multi-cloud storage, digital applications, video streaming, gaming, robotics, quantum computing~~ and ~~artificial~~margin ~~intelligence~~pressure: ~~has~~Legacy ~~substantially~~wireline ~~increased demand for robust, scalable network~~ services. Wecontinue ~~are continuing~~ to ~~enhance~~shrink, ~~our~~while ~~product~~newer ~~and service~~ offerings ~~and~~often ~~taking~~deliver ~~other~~lower ~~steps~~margins to— ~~enable~~especially ~~customers~~those toinvolving ~~have~~third-party ~~access~~connectivity to— ~~greater~~necessitating ~~bandwidth~~cost optimization and ~~capacity~~pricing discipline.

•~~Businesses~~Globalization ~~continue~~and tonetwork ~~adopt~~expansion ~~distributed,~~amid ~~global~~cost ~~operating~~pressures: Distributed business models drive demand for high-capacity, low-latency networks. We are expanding ~~and enhancing~~ our ~~fiber~~ network, ~~connecting~~capacity ~~more buildings~~ to ~~our~~capture ~~network~~growth, towhile ~~generate~~managing ~~revenue~~vendor ~~opportunities~~cost increases and ~~reducing~~dis-synergies from our ~~reliance~~recent ~~upon other carriers~~divestiture.

•~~Changes~~Monetizing innetwork ~~customer~~assets ~~preferences~~with ~~and~~execution inrisk: ~~the~~We ~~regulatory,~~aim ~~technological~~to ~~and~~generate ~~competitive~~revenue ~~environment~~through ~~are~~custom ~~(i)~~connectivity ~~significantly reducing demand for our more mature service offerings~~solutions, ~~commoditizing~~including ~~certain offerings~~PCF, orby ~~resulting~~leveraging inexcess ~~volume~~conduit ~~or rate reductions for other offerings~~ and ~~(ii)~~fiber ~~also~~assets. ~~creating~~These ~~certain~~ opportunities ~~for~~can usbe ~~arising~~significant ~~out~~but ofdepend ~~increased~~on market demand, ~~for~~regulatory ~~advanced~~conditions, ~~networking services~~ and ~~high-speed,~~timely ~~low latency secure data transmissions~~execution.

~~•The~~These ~~operating~~and ~~margins~~other ofdevelopments ~~several~~and oftrends impacting our ~~newer,~~operations ~~more technologically advanced services, some of which may connect to customers through other carriers,~~ are ~~lower~~discussed ~~than~~in ~~the~~"Risk ~~operating~~Factors" ~~margins~~in onItem ~~our~~1A ~~traditional,~~and ~~on-net~~elsewhere ~~wireline~~throughout ~~services~~MD&A.

~~•Uncertainties regarding our financial performance and overall leverage have caused, and may continue to cause, certain customers and other third parties to avoid transacting business with us.~~31

~~•Our~~RESULTS ~~expenses~~OF ~~will be impacted by higher vendor costs, reduced economies of scale and other dis-synergies due to our 2022 and 2023 divestitures and any future divestitures.~~OPERATIONS

~~•Declines~~The infollowing ~~our~~table ~~traditional~~summarizes ~~wireline~~the ~~services~~results ~~and~~of ~~other~~our ~~more~~consolidated ~~mature~~operations ~~offerings~~for ~~have~~the ~~necessitated~~years ~~right-sizing~~ended ~~our~~December ~~cost~~31, ~~structure~~2025 toand ~~remain competitive.~~2024:

•We have historically generated revenue by entering into transactions that utilize conduit, fiber or other assets on our network to create custom networks for our customers, including through our Private Connectivity FabricSM solutions. We plan to continue to actively pursue additional revenue-generating opportunities with respect to these assets through right-of-use agreements, leases or other agreements. We may or may not consummate such transactions from time to time, and the revenue from and obligations associated with any such opportunities may be significant, either individually or in the aggregate. The completion of any future transactions may be subject to customary conditions, and may not be executed in a timely manner, or at all.


	Years Ended December 31,
	2025		2024
	(Dollars in millions)
Operating revenue	$	6,543	6,496
Operating expenses	6,454		6,435
Operating income	89		61
Other expense, net	(1,127)		(372)
Loss before income taxes	(1,038)		(311)
Income tax benefit	(258)		(35)
Net loss	$	(780)	(276)

These and other developments and trends impacting our operations are discussed elsewhere in Item 1A and this Item 7.

Results of Operations

Our analysis presented below is organized to provide the information we believe will be useful for understanding the relevant trends affecting our business. This discussion should be read in conjunction with our consolidated financial statements and the Notes thereto in Item 8 of this report.

Results in this section include the results of our EMEA business prior to being sold on November 1, 2023.

The following table summarizes the results of our consolidated operations for the years ended December 31, 2024 and 2023:

	Years Ended December 31,
	2024		2023
	(Dollars in millions)
Operating revenue	$	6,496	7,037
Operating expenses	6,435		8,662
Operating income (loss)	61		(1,625)
Other expense, net	(372)		(381)
Loss before income taxes	(311)		(2,006)
Income tax benefit	(35)		(2)
Net loss	$	(276)	(2,004)

Operating Revenue

WeThe ~~categorize~~following ~~our~~table ~~products~~summarizes ~~and~~our ~~services~~consolidated operating revenue ~~among~~recorded ~~the~~under ~~following~~each of our revenue categories as described in Note 4 — Revenue Recognition in Item 8:

•Grow, which includes existing and emerging products and services in which we are significantly investing, including our colocation, dark fiber and conduit, Edge Cloud, IP, managed security, software-defined wide area networks ("SD WAN"), Unified Communications and Collaboration ("UC&C") and wavelengths services;


	Years Ended December 31,			% Change
	2025		2024
	(Dollars in millions)
Grow	$	4,086	3,837	6	%
Nurture	1,365		1,522	(10)	%
Harvest	683		757	(10)	%
Other	131		118	11	%
Affiliate Services	278		262	6	%
Total operating revenue	$	6,543	6,496	1	%

~~•Nurture,~~Operating ~~which~~revenue ~~includes~~increased ~~our~~$47 ~~more~~million ~~mature~~in ~~offerings,~~2025 ~~including~~compared ~~ethernet~~to ~~and~~2024. ~~VPN~~The ~~data~~following ~~networks~~were ~~services;~~the primary drivers within each product category:

•~~Harvest,~~Grow ~~which~~increased ~~includes~~$249 ~~our~~million ~~legacy~~in ~~services~~2025. ~~managed~~This ~~for~~was ~~cash~~primarily ~~flow,~~as ~~including~~a ~~Time~~result ~~Division Multiplexing voice, and private line services;~~of:

~~•Other,~~◦an ~~which~~increase ~~includes~~of ~~primarily~~$113 ~~managed~~million ~~and~~in ~~professional service solutions and content delivery network ("CDN")~~ revenue, ~~prior~~from todark ~~the~~fiber ~~sale~~and ~~of select CDN contracts in late 2023~~conduit; ~~and~~

~~•Affiliate~~◦an ~~Services,~~increase ~~which~~of ~~includes~~$71 ~~communications~~million ~~services~~in ~~provided~~IP toservices; ~~our affiliates that we also provide to our external customers.~~

~~From~~◦an ~~time~~increase toof ~~time,~~$37 wemillion ~~may~~of ~~change~~broadband ~~the~~and ~~categorization~~other ofenterprise ~~our~~technology ~~products~~services; and ~~services.~~

~~For~~◦an ~~more~~increase ~~information,~~of ~~see~~$30 ~~"Products~~million ~~and Services"~~ in ~~Item~~wavelengths ~~I of Part I of this report~~services.

34•Nurture decreased $157 million in 2025. This was primarily as a result of:

~~The~~◦a ~~following~~decrease ~~table summarizes our consolidated operating revenue recorded under each~~ of ~~our~~$78 ~~revenue~~million ~~categories~~in ~~described~~Ethernet ~~above:~~services; and

	Years Ended December 31,			% Change
	2024		2023
	(Dollars in millions)
Grow	$	3,837	3,898	(2)	%
Nurture	1,523		1,699	(10)	%
Harvest	756		972	(22)	%
Other	118		244	(52)	%
Affiliate Services	262		224	17	%
Total operating revenue	$	6,496	7,037	(8)	%

◦a decrease of $78 million in traditional VPN services.

Our total operating revenue decreased by $541 million for the year ended December 31, 2024 as compared to the year ended December 31, 2023. Approximately $547 million of this decrease was due to the sale of our EMEA business and select CDN contracts in the fourth quarter of 2023. Within each revenue category this decrease was primarily due to the following:32

•~~Grow~~Harvest decreased by $6174 million ~~primarily~~in ~~driven by a decrease of approximately $272 million associated with the sale of the EMEA business~~2025. This was ~~partially~~primarily ~~offset~~as bya ~~growth~~result ~~in dark fiber and conduit revenue~~ of ~~$111 million and an increase in IP revenue of $103 million.~~:

~~•Nurture decreased by $176 million primarily due to~~ ◦a ~~$88 million~~ decrease ~~from the sale~~ of ~~the~~$49 ~~EMEA~~million ~~business. The remainder of the decline was primarily due to a decrease~~ in ~~Ethernet~~legacy ~~services~~voice ~~of $56 million~~ and ~~declines~~private inline ~~traditional VPN~~ services; ~~of $42 million.~~and

~~•Harvest decreased by $216 million, of which approximately $70 million was due to the sale of the EMEA business. The remainder of the decline was primarily due to~~ ◦a decrease ~~in legacy voice and private line services~~ of $~~111~~24 million ~~and a decline~~ in ~~managed~~other ~~hosting~~legacy ~~revenue of $19 million~~services.

•Other ~~decreased~~increased by $~~126~~13 million, ~~of which approximately $93 million and $24 million was attributable to the sale of select CDN contracts and the sale of the EMEA business, respectively,~~ in ~~the fourth quarter of 2023~~2025. ~~These~~This ~~decreases~~was ~~were~~primarily ~~partially~~as ~~offset~~a byresult ~~an increase in equipment sales revenue~~ of ~~$26 million.~~:

~~•Affiliate~~◦an ~~Services~~increase ~~increased~~of by $3834 million ~~primarily due to a $29 million increase~~ in ~~Ethernet~~managed ~~services~~ and ~~$11~~professional ~~million increase in dark fiber~~ services ~~provided~~revenue; ~~to our affiliates.~~and

35◦an offsetting decrease of $17 million in equipment sales revenue.

•Affiliate Services increased $16 million in 2025. This was primarily as a result of:

◦an increase of $45 million from Ethernet services provided to our affiliates;

◦an offsetting decrease of $17 million from wavelengths services provided to our affiliates; and

◦an offsetting decrease of $10 million from revenue from dark fiber provided to our affiliates.

Operating Expenses

The following table summarizes our consolidated operating expenses; however, these expense categories may not be comparable to those of other companies:

	Years Ended December 31,			% Change
	2024		2023
	2025		2024
	(Dollars in millions)
Cost of services and products (exclusive of depreciation and amortization)	$	2,~~720~~841	32,~~028~~720	~~(10)~~4	%
Selling, general and administrative	1,~~227~~180		1,~~360~~227	(104)	%
Net loss on sale of businesses	17		123	(86)	%
Net loss on sale of business	—		17	nm
Operating expenses - affiliates	1,~~066~~059		~~781~~1,066	36(1)	%
Depreciation and amortization	1,~~405~~374		1,~~400~~405	—(2)	%
Goodwill impairment	—		1,970	nm
Total operating expenses	$	6,454	6,435	—	%
Total operating expenses	$	6,435	8,662	(26)	%

_______________________________________________________________________________

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

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

Cost of services and products (exclusive of depreciation and amortization) ~~decreased~~increased by $~~308~~121 million ~~for~~in ~~the~~2025 ~~year ended December 31, 2024 as~~ compared to ~~the year ended December 31, 2023~~2024. This ~~decrease~~ was primarily ~~due~~as to a ~~decrease~~result of $440 million associated with the sale of the EMEA business in the fourth quarter of 2023, as well as reductions of $69 million in employee-related expense from lower headcount in the business we retained following that sale and the 2022 sales of our Latin American business. These decreases were partially offset by approximately $208 million of higher facilities costs.:

•an increase of $44 million in network expenses;

•an increase of $40 million in employee-related expenses;

•an increase of $33 million in professional fees; and

•an increase of $11 million in real estate and power costs.

Selling, General and Administrative

Selling, general and administrative expenses decreased by $~~133~~47 million ~~for~~in ~~the~~2025 ~~year ended December 31, 2024 as~~ compared to ~~the year ended December 31, 2023~~2024. ~~The~~This ~~decrease~~ was ~~due to (i) a decrease in employee related costs of approximately $100 million~~ primarily ~~due~~as ~~to lower headcount, (ii)~~ a ~~decrease~~result of: approximately $80 million associated with the sale of the EMEA business in the fourth quarter of 2023, (iii) a decrease of $95 million related to the sale of select CDN contracts in the fourth quarter 2023, which is made up of a $73 million loss recognized relating to the sale in the fourth quarter of 2023 and a $22 million deferred gain recognized in the first quarter of 2024 and (iv) lower marketing advertising expense of $20 million. These decreases were partially offset by (i) an increase of $100 million in legal and other professional fees, mainly driven by our first and third quarter 2024 debt transactions and (ii) an increase of $80 million attributable to an impairment loss related to the initiation of marketing our Broomfield, Colorado office buildings to locate a buyer and the classification of those buildings as held for sale.

~~Net~~•a ~~Loss~~decrease onof ~~Sale~~$108 million in legal and other professional fees, mainly driven by our debt transactions in the first and third quarters of ~~Businesses~~2024, with no comparably-sized transactions in 2025;

~~For~~•an aoffsetting ~~discussion~~increase of ~~the~~$32 ~~net~~million ~~loss~~in onexternal ~~the sale of businesses that we recognized for the years ended December 31, 2024 and 2023, see Note 2—Divestitures of the Latin American and EMEA Businesses.~~commissions;

•an offsetting increase of $17 million in marketing and advertising expenses; and

•an offsetting increase of $15 million in hardware and software expenses.

Net Loss on Sale of Business

For a discussion of the net loss on sale of business that we recognized for 2024, see Note 2 — Divestiture in Item 8.

Operating Expenses - Affiliates

Operating expenses - affiliates ~~increased~~decreased by $~~285~~7 million ~~for~~in ~~the~~2025 ~~year ended December 31, 2024 as~~ compared to ~~the~~2024. ~~year~~This ~~ended~~was ~~December 31, 2023~~ primarily ~~due~~as toa ~~$185~~result ~~million~~ of higher ethernet and other legacy direct telecommunication services purchased from affiliates and $58 million of increased network services purchased from affiliates. Additionally, we had an increase of $42 million in allocated employee and corporate expense provided to us by our affiliates.:

36•a decrease of $59 million in wavelengths services purchased from our affiliates;

•an offsetting increase of $29 million in Ethernet, other network services, and legacy direct telecommunication services purchased from affiliates; and

•an offsetting increase of $27 million in allocated employee and corporate expense provided to us by our affiliates which includes the impact of (i) higher overall professional fees related to our ongoing modernization and simplification strategies, (ii) increased employee-related expenses, and (iii) the impact of ongoing adjustments to the basis for allocations of costs shared amongst affiliates in the normal course of business.

Depreciation and Amortization

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

	Years Ended December 31,			% Change
	2024		2023
	2025		2024
	(Dollars in millions)
Depreciation	$	~~676~~691	~~686~~676	~~(1)~~2	%
Amortization	~~729~~683		~~714~~729	2(6)	%
Total depreciation and amortization	$	1,~~405~~374	1,~~400~~405	—(2)	%

Depreciation ~~expense~~increased ~~decreased by~~ $1015 million ~~for~~in ~~the~~2025 ~~year ended December 31, 2024 as~~ compared to ~~the~~2024. ~~year~~This ~~ended~~was ~~December 31, 2023~~ primarily ~~due~~as toa ~~$27~~result ~~million due to changes in depreciation lives~~ of ~~fiber assets and $16 million associated with net growth in depreciable assets. These decreases were partially offset by an $18 million increase from the accelerated depreciation of CDN assets.~~:

~~Amortization~~•an ~~expense~~increase ~~increased~~of by $1548 million ~~for~~associated ~~the~~with ~~year~~a ~~ended~~net ~~December 31, 2024 as compared to the year ended December 31, 2023 primarily due to $25 million~~ increase in ~~accelerated~~depreciable ~~amortization in decommissioned~~ assets,; ~~mostly related to our 2023 sale of CDN contracts. These increases were partially offset by a $12 million decrease associated with CDN customer relationships.~~and

~~Goodwill~~•an ~~Impairment~~offsetting decrease of $18 million from accelerated depreciation of CDN assets in 2024.

~~Prior~~Amortization todecreased ~~becoming~~$46 ~~fully~~million ~~impaired~~ in ~~the~~2025 ~~second~~compared ~~quarter of 2023, we were required~~ to ~~perform impairment tests related to our goodwill annually, which we perform as of October 31, or sooner if an indicator of impairment occurs~~2024. ~~The~~This ~~sustained decline in Lumen's share price during the second quarter of 2023~~ was ~~considered~~primarily as a ~~triggering~~result ~~event requiring evaluation~~ of ~~goodwill impairment.~~:

~~When we performed impairment tests during the second quarter of 2023, we concluded the estimated fair value of our reporting unit was less than our carrying value of equity as of our testing dates. As~~ •a ~~result,~~decrease ~~we recorded a non-cash, non-tax-deductible goodwill impairment charge~~ of $~~2.0 billion~~31 inmillion ~~the~~from ~~second~~accelerated ~~quarter~~amortization of ~~2023.~~decommissioned assets; and

See Note 3—Goodwill, Customer Relationships and Other Intangible Assets to our consolidated financial statements in Item 8 of Part II of this report for further details on these tests and impairment charges.34

•a decrease of $15 million associated with a net reduction in amortizable assets.

Other Consolidated Results

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

	Years Ended December 31,			% Change
	2024		2023
	2025		2024
	(Dollars in millions)
Interest expense	$	(~~819~~751)	(~~458~~819)	79(8)	%
Interest income - affiliate	~~245~~287		62245	nm17	%
Net gain on early retirement of debt (Note 7)	119		—	nm
Net (loss) gain on early retirement of debt	(739)		119	nm
Other income, net	8376		1583	nm(8)	%
Total other expense, net	$	(~~372~~1,127)	(~~381~~372)	~~(2)~~nm	%
Income tax benefit	$	(35258)	(235)	nm

_______________________________________________________________________________

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 ~~increased~~decreased by $~~361~~68 million ~~for~~in ~~the~~2025 ~~year ended December 31, 2024 as~~ compared to ~~the year ended December 31, 2023~~2024. ~~The~~This ~~increase~~ was primarily ~~due~~as toa ~~(i)~~result ~~an increase in the average interest rate from 4.78% to 6.81% and (ii) an increase in average outstanding long-term debt~~ of ~~approximately $780 million.~~:

•an increase of $28 million in capitalized interest;

•a decrease in average outstanding long-term debt of $150 million; and

•a decrease in average interest rate from 7.82% to 7.43%.

Interest Income - Affiliate

Interest income - affiliate increased by $~~183~~42 million ~~for~~in ~~the~~2025 ~~year ended December 31, 2024 as~~ compared to ~~the~~2024. ~~year~~This ~~ended~~was ~~December 31, 2023~~ primarily ~~due~~as toa anresult increase in the average interest rate received by us from our affiliates from 4.25% to 9.57%. Additionally average outstanding long-term debt owed to us by our affiliates increased by approximately $1 billion. See Note 15—Affiliate Transactions for more information on these facilities.of:

•an increase in average interest rate received by us from our affiliates from 9.59% to 10.71%; and

•an increase in average outstanding long-term debt owed to us by our affiliates of $208 million.

See Note 15 — Affiliate Transactions in Item 8 for more information on these facilities.

Net (Loss) Gain on Early Retirement of Debt

For a discussion of the debt transactions that resulted in the net gain on debt that we recognized in 2025 and 2024, see Note 7 — Long-Term Debt and Credit Facilities in Item 8.

Other Income, Net

The following table summarizes our total other income, net:

	Years Ended December 31,
	2024		2023
	2025		2024
	(Dollars in millions)
Foreign currency loss	$	(19)	(8)
Foreign currency gain (loss)	$	8	(19)
Interest income	5430		2254
Other	4838		148
Total other income, net	$	8376	$83	15

Interest Income

Interest income ~~increased~~decreased ~~for~~$24 million ~~the~~in ~~year~~2025 ~~ended December 31, 2024 as~~ compared to ~~the~~2024. ~~year~~This ~~ended~~was ~~December 31, 2023~~ primarily ~~due~~as to a ~~higher~~result ~~average cash and cash equivalents balance during the period and higher interest rates earned thereon.~~of:

•lower average cash and cash equivalents balance during the period; and

•lower interest rates earned thereon.

Income Tax Expense

For ~~the~~2025 ~~years ended December 31, 2024~~ and ~~2023~~2024, our effective income tax rate was 1124.39% and 011.13%, respectively. The effective tax rate for the year ended December 31, 2023 includes a $389 million unfavorable impact of a non-deductible goodwill impairment charge. See Note 13—Income Taxes and "Critical Accounting Policies and Estimates—Income Taxes" below for additional information.

~~Critical~~For ~~Accounting~~additional ~~Policies~~information, see Note 13 — Income Taxes in Item 8 and "Critical Accounting Estimates — Income Taxes" below.

~~Our~~LIQUIDITY ~~consolidated~~AND ~~financial~~CAPITAL statements are prepared in accordance with accounting principles that are generally accepted in the United States. The preparation of these consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of our assets, liabilities, revenue and expenses. We have identified certain policies and estimates as critical to our business operations and the understanding of our past or present results of operations related to (i) goodwill, customer relationships and other intangible assets; (ii) loss contingencies; (iii) affiliate transactions; and (iv) income taxes. These policies and estimates are considered critical because they had a material impact, or they have the potential to have a material impact, on our consolidated financial statements and because they require us to make significant judgments, assumptions or estimates. We believe that the estimates, judgments and assumptions made when accounting for the items described below were reasonable, based on information available at the time they were made. However, actual results may differ from those estimates, and these differences may be material.RESOURCES

Goodwill, Customer Relationships and Other Intangible Assets

Intangible assets arising from business combinations, such as goodwill, customer relationships, capitalized software, trademarks and trade names, are initially recorded at estimated fair value. We amortize customer relationships primarily over an estimated life of seven to 14 years, using the straight-line method. We amortize capitalized software using the straight-line method primarily over estimated lives ranging up to seven years. We amortized our other intangible assets over an estimated life of five years prior to becoming fully amortized in the fourth quarter of 2022. We annually review the estimated lives and methods used to amortize our other intangible assets. The amount of future amortization expense may differ materially from current amounts, depending on the results of our annual reviews. At December 31, 2024, our definite-lived intangible assets totaled $3.6 billion, or 22% of our total assets and we had no goodwill or indefinite-lived intangible assets.

Our goodwill was derived from Lumen's acquisition of us where the purchase price exceeded the fair value of the net assets acquired. Prior to becoming fully impaired in the second quarter of 2023, we were required to assess our goodwill for impairment annually, or more frequently if an event occurred or circumstances changed that indicate it is more likely than not the fair value of our reporting unit was less than our carrying value. In assessing goodwill for impairment, we would first assess qualitative factors to determine whether it was more likely than not that the fair value of our reporting unit was less than our carrying value.

Prior to our goodwill becoming fully impaired in the second quarter of 2023, our annual impairment assessment date for goodwill was October 31, at which date we compared our estimated fair value of equity of our reporting unit to the carrying value of equity. If the estimated fair value was greater than the carrying value, we concluded no impairment exists. If the estimated fair value was less than the carrying value, we recorded a non-cash impairment charge equal to the excess amount. Depending on the facts and circumstances, we typically estimated the fair value by considering either or both of (i) a discounted cash flow method, which was based on the present value of projected cash flows over a discrete projection period and a terminal value, which was based on the expected normalized cash flows following the discrete projection period, and (ii) a market approach, which included the use of multiples of publicly-traded companies whose services were comparable to ours. With respect to our analysis using the discounted cash flow method, the timing and amount of projected cash flows under these forecasts required estimates developed from our long-range plan, which is informed by wireline industry trends, the competitive landscape, product lifecycles, operational initiatives, capital allocation plans and other company-specific and external factors that influence our business. These projected cash flows considered recent historical results and are consistent with the Company's short-term financial forecasts and long-term business strategies. Due to inherent uncertainties, actual cash flows could vary significantly from our projected cash flows. Our determination of the discount rate was based on a weighted average cost of capital approach, which used a market participant’s cost of equity and after-tax cost of debt and reflects certain risks inherent in the projected cash flows. With respect to our analysis using the market approach, the fair value was estimated based upon a market multiple applied to revenue and earnings before interest, taxes, depreciation and amortization ("EBITDA"), adjusted for an appropriate control premium based on recent market transactions. The fair value of our reporting unit was estimated under the market approach, using revenue and EBITDA market multiples weighted depending on the characteristics of the reporting unit. We performed sensitivity analyses that considered a range of discount rates and a range of EBITDA market multiples and we believe the estimates, judgments, assumptions and allocation methods used by us were reasonable.

For additional information on our goodwill balances and results of our impairment analyses, see Note 3—Goodwill, Customer Relationships and Other Intangible Assets for additional information.

Loss Contingencies

We are involved in several potentially material legal proceedings, as described in more detail in Note 16—Commitments, Contingencies and Other Items. On a quarterly basis, we assess potential losses in relation to these and other pending or threatened tax and legal matters. For matters not related to income taxes, if a loss is considered probable and the amount can be reasonably estimated, we recognize an expense for the estimated loss. To the extent these estimates are more or less than the actual liability incurred upon resolving these matters, our earnings will be increased or decreased accordingly. If the differences are material, our consolidated financial statements could be materially impacted.

For matters related to income taxes, if we determine in our judgment that the impact of an uncertain tax position is more likely than not to be sustained upon audit by the relevant taxing authority, then we recognize in our financial statements a benefit for the largest amount that is more likely than not to be sustained. We do not recognize any portion of an uncertain tax position if we determine in our judgment that the position has less than a 50% likelihood of being sustained. Though the validity of any tax position is a matter of tax law, the body of statutory, regulatory and interpretive guidance on the application of the law is complex and often ambiguous, particularly in certain of the non-U.S. jurisdictions in which we operate. As such, our tax positions may not be sustained, which could materially impact our consolidated financial statements.

Affiliate Transactions

We provide to and receive from Lumen Technologies and its subsidiaries ("our affiliates") various communications and other services. We recognize intercompany charges for the amounts billed to us by our affiliates and we recognize intercompany revenue for services we bill to our affiliates.

Because of the significance of the services we provide to our affiliates and our other affiliate transactions, and the services our affiliates provide to us, the results of operations, financial position and cash flows presented herein are not necessarily indicative of the results of operations, financial position and cash flows we would have achieved had we operated as a stand-alone entity during the periods presented. Regarding telecommunications services that we received from our affiliates, we expect a significant reduction to affiliate expense for the fiscal year ended December 31, 2025. This is primarily due to the repricing of certain services provided to us to align with lower market rates including certain transport services, along with the termination of certain affiliate circuits that we no longer need to provide services to our external customers. See Note 15—Affiliate Transactions for additional information.

Income Taxes

We are included in the consolidated federal income tax return of Lumen Technologies. Lumen Technologies treats our consolidated results as if we were a separate taxpayer. We are required to pay our tax liabilities to Lumen Technologies based upon our separate return taxable income. We are also included in the combined state tax returns filed by Lumen Technologies.

Our provision for income taxes includes amounts for tax consequences deferred to future periods. We record deferred income tax assets and liabilities reflecting future tax consequences attributable to (i) tax credit carryforwards (ii) differences between the financial statement carrying value of assets and liabilities and the tax basis of those assets and liabilities, and (iii) tax NOLs. Deferred taxes are computed using enacted tax rates expected to apply in the year in which the differences are expected to affect taxable income. The effect of a change in tax rate on deferred income tax assets and liabilities is recognized in earnings in the period that includes the enactment date.

The measurement of deferred taxes often involves the exercise of considerable judgment related to the realization of tax basis. Our deferred tax assets and liabilities reflect our assessment that tax positions taken in filed tax returns and the resulting tax basis, are more likely than not to be sustained if they are audited by taxing authorities. Assessing tax rates that we expect to apply and determining the years when the temporary differences are expected to affect taxable income requires judgment about the future apportionment of our income among the states in which we operate. Any changes in our practices or judgments involved in the measurement of deferred tax assets and liabilities could materially impact our financial condition or results of operations.

In connection with recording deferred income tax assets and liabilities, we establish valuation allowances when necessary to reduce deferred income tax assets to amounts that we believe are more likely than not to be realized. We evaluate our deferred tax assets quarterly to determine whether adjustments to our valuation allowances are appropriate in light of changes in facts or circumstances, such as changes in tax law, interactions with taxing authorities and developments in case law. In making this evaluation, we rely on our recent history of pre-tax earnings. We also rely on our forecasts of future earnings and the nature and timing of future deductions and benefits represented by the deferred tax assets, all of which involve the exercise of significant judgment. As of December 31, 2024, we established a valuation allowance of $126 million primarily related to state NOLs, based on the determination that it was more likely than not that this amount of these NOLs would expire unused. If forecasts of future earnings and the nature and estimated timing of future deductions and benefits change in the future, we may determine that existing valuation allowances must be revised or eliminated or new valuation allowances created, any of which could materially impact our financial condition or results of operations. See Note 13—Income Taxes for additional information.

Liquidity and Capital Resources

Overview of Sources and Uses of Cash

We are a 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.

AsOur ofprimary ~~December~~sources ~~31, 2024, we had $2.7 billion~~ of outstanding notes receivable-affiliate under credit facilities that we extended to Lumen Technologies on the terms and conditions described in Note 15—Affiliate Transactions. A significant component of our liquidity ~~is dependent upon Lumen's ability to repay its obligation to us.~~ are:

~~As of December 31, 2024, we held~~ •cash ~~and~~from ~~cash~~operating equivalents of $600 million, of which $21 million were held in foreign bank accounts for funding our foreign operations. Due to various factors, our access to foreign cash is generally more restricted than our access to domestic cash.activities;

~~We anticipate that any future liquidity needs will be met through (i) our cash provided by operating activities, (ii)~~ •amounts due to us from Lumen ~~Technologies~~, (iii) our ability to refinance our debt obligations 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 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~~ability ~~results as of December 31, 2024. 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 berefinance 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~~debt ~~and~~obligations; ~~compliance burdens, we expect that it will have an immaterial impact on our financial statements for the tax period ending December 31, 2024.~~and

~~For~~•capital ~~additional~~contributions, ~~information~~advances, ~~see~~or ~~"Risk~~loans ~~Factors—Financial~~from ~~Risks"~~Lumen inor ~~Item~~its ~~1A of Part I of this report~~affiliates.

~~Impact~~Key ofbalances ~~the~~as ~~Divestiture~~ of ~~our~~December ~~Latin~~31, ~~American~~2025 ~~and EMEA Businesses~~included:

As•Cash ~~discussed in Note 2—Divestitures of the Latin American~~ and EMEA Businesses to our consolidated financial statements in Item 8 of Part II of this report, we sold our Latin American business on August 1, 2022 and our EMEA business on November 1, 2023. As further described elsewhere herein, these transactions have provided us with a substantial amount of cash ~~proceeds~~equivalents: ~~but~~$380 ~~have~~million ~~also reduced our base of income-generating assets that generate our recurring cash from operating activities.~~

41•Notes receivable-affiliate: $2.7 billion

~~Impact~~•Total ofconsolidated ~~PCF~~indebtedness: ~~Transactions~~$9.8 billion

~~During the second half of 2024 Lumen announced that Lumen and its subsidiaries, including us, sold several billion dollars in new PCF solutions.~~36

~~Lumen~~As ~~and its subsidiaries expect to receive the majority~~ of ~~cash~~December ~~from these agreements~~31, ~~which include advance payments to fund network expansion projects~~2025, ~~over~~$28 ~~the~~million ~~next~~of ~~three~~our tocash ~~four years. Lumen~~ and ~~its~~cash ~~subsidiaries~~equivalents ~~will~~were ~~incur~~held ~~certain material expenditures~~ in ~~connection~~foreign ~~with~~bank ~~these~~accounts ~~agreements,~~for ~~and~~funding ~~expect~~our ~~the~~foreign ~~majority~~operations. ofDue ~~such expenditures~~ to bevarious ~~made~~factors, ~~over~~our ~~the~~access ~~same~~to ~~period~~foreign ofcash ~~time. The payments Lumen and its subsidiaries actually make and receive may vary materially from what~~ is ~~expected~~generally ~~and~~more ~~will~~restricted ~~depend,~~than ~~among~~our ~~other~~access ~~things,~~to ondomestic ~~the timing of delivery and installation of the products and services by Lumen and its subsidiaries~~cash.

~~During~~We ~~the~~regularly ~~second~~review ~~half~~liquidity ofand ~~2024,~~capital weallocation ~~began~~strategies ~~receiving~~with ~~advance~~senior ~~payments~~management ~~under these agreements, which increased our net cash provided by operating activities reflected in our consolidated statements of cash flows~~ and ~~our~~the ~~deferred~~Board ~~revenue reflected in our consolidated balance sheets. We anticipate that our continued receipt~~ of cash payments under these agreements will (i) cause our consolidated cash flows to vary from quarter to quarter over the next several years and (ii) enable us to accelerate our network simplification initiatives. In additionDirectors, weadjusting ~~expect our consolidated capital expenditures to increase~~ as westrategies ~~use~~and ~~these~~conditions ~~cash receipts to fund network expansion projects contemplated under such agreements~~change.

WeBased ~~expect~~on tocurrent ~~enter~~assumptions, ~~into~~we ~~additional~~believe ~~agreements~~our inliquidity ~~the~~sources ~~future~~— tooperating ~~sell~~cash ~~products~~flows, available cash, and ~~services~~credit ascapacity ~~part~~— ofwill ~~our~~be ~~PCF~~sufficient ~~solutions~~to ~~but~~fund ~~cannot~~near-term ~~provide~~requirements ~~any~~and ~~assurances~~strategic investments. ~~See~~For ~~"Risk~~additional ~~Factors"~~information ~~under~~on ~~Item~~risks 1Athat ofcould ~~Part~~affect IIliquidity, ofsee ~~this~~“Risk ~~report~~Factors — Financial Risks” in Item 1A.

Cash Flow Activities

The following table summarizes our consolidated cash flow activities:


	Years Ended December 31,			$ Change
	2025		2024
	(Dollars in millions)
Net cash provided by operating activities	$	4,066	3,131	935
Net cash used in investing activities	(2,285)		(2,204)	81
Net cash used in financing activities	(2,001)		(2,345)	(344)

Operating Activities

Net cash provided by operating activities increased $935 million in 2025 compared to 2024. This was primarily as a result of:

•an increase in deferred revenue related to receipt of advance cash payments pursuant to recent sales of PCF solutions.

Cash provided by operating activities is subject to variability period over period as a result of timing differences, including with respect to the collection of receivables and payments of interest expense, accounts payable, and bonuses.

For additional information about our operating results, see "Results of Operations" above.

Investing Activities

Net cash used in investing activities increased $81 million in 2025 compared to 2024. This was primarily as a result of:

•an increase in capital expenditures; and

•an offsetting decrease due to the issuance of notes receivable - affiliate to our ultimate parent company in 2024 under the credit facilities described elsewhere herein, with no like transaction in 2025.

Financing Activities

Net cash used in financing activities decreased $344 million in 2025 compared to 2024. This was primarily as a result of:

•an increase in net proceeds from issuances of debt;

•a decrease in distributions to affiliates; and

•an offsetting increase in payments of long-term debt.

See Note 7 — Long-Term Debt and Credit Facilities for details on our debt transactions.

Short-term Liquidity Needs

As of December 31, 2025, we held cash and cash equivalents of $380 million and outstanding Notes receivable - affiliate of $2.7 billion. A significant component of our liquidity is dependent upon Lumen's ability to repay its obligation to us. See Note 15 — Affiliate Transactions for details on terms and conditions of the credit facilities we extended to Lumen Technologies. These resources, together with cash generated from operating activities, represent our primary sources of liquidity for the next 12 months.

Based on our current capital allocation objectives, we project expenditures for the next 12 months to include, among others, capital expenditures, primarily for network modernization and fiber expansion, and lease payments for our operating and finance lease obligations.

We expect to fund these expenditures primarily through operating cash flows, supplemented by available cash and borrowing capacity as needed. Based on current assumptions, we believe our liquidity sources will be sufficient to fund near-term requirements and strategic investments.

For additional information on short-term liquidity needs, see “Future Contractual Obligations” below.

Long-term Liquidity Needs

Beyond the next 12 months, we plan to refinance a substantial portion of maturing debt through future debt issuances, subject to market conditions and covenant restrictions. Our ability to access capital markets depends on credit ratings and prevailing interest rates, and we cannot assure favorable terms for future borrowings. We may also consider other sources of liquidity, such as asset dispositions, depending on market conditions.

For additional information on our credit ratings and factors that may affect our access to capital markets, see “— Future Debt Transactions” below.

For additional information on long-term liquidity needs, see “Future Contractual Obligations” below.

Impact of Strategic Transactions on Liquidity

Our liquidity and capital resources have been influenced by several strategic actions aimed at optimizing our financial position, enhancing flexibility, and supporting long-term transformation initiatives. Key actions include:

•Recent divestiture: The 2023 sale of our EMEA business generated significant cash proceeds but reduced recurring operating cash flows.

•PCF agreements: Advance payments under PCF agreements increased operating cash flow and deferred revenue. These payments vary by quarter and fund network expansion and simplification projects, which will increase capital expenditures. We expect to enter into additional agreements in the future to sell products and services as part of our PCF solutions but cannot provide any assurances as to these additional agreements or the anticipated benefits thereof. See "Risk Factors" in Item 1A.

We expect these and future transactions to influence cash flows, leverage, and investment capacity. While divestitures provide immediate liquidity and PCF agreements support network expansion, they also introduce variability in operating cash flows. We will continue to pursue opportunities aligned with our capital allocation priorities and market conditions.

Capital Expenditures

We ~~incur~~regularly ~~capital~~invest ~~expenditures~~in oncapital anprojects ~~ongoing~~to ~~basis~~expand inand ~~order~~improve toservices, enhance and modernize ~~our~~ networks, ~~compete~~fulfill ~~effectively~~contractual inobligations, ~~our markets~~ and ~~expand~~strengthen our ~~service~~competitive ~~offerings~~position. ~~Lumen~~Discretionary ~~Technologies~~projects ~~and~~are weevaluated ~~evaluate~~by ~~capital~~us ~~expenditure~~and ~~projects~~Lumen Technologies based on ~~a variety of factors, including expected~~ strategic ~~impacts~~impact (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~~spending is influenced by, ~~among other things~~demand, ~~demand~~contractual ~~for Lumen's services~~ and ~~products~~regulatory requirements, cash flow ~~generated by operating activities~~, ~~cash required for other purposes~~ and ~~the~~resource availability ~~of requisite supplies, labor and permits~~. ~~For~~We ~~more~~expect ~~information on our~~ capital spending, ~~see~~to ~~"Business"~~be ~~and~~focused ~~"Risk Factors" in Items 1 and 1A, respectively, of Part I of this report.~~on:

•expanding our fiber network;

•modernizing and enhancing network efficiency and reliability;

•developing new services; and

•replacing aging network assets.

These investments aim to improve service quality, drive innovation, and position us to meet future demand.

For additional details on our capital spending, see “Cash Flow Activities — Investing Activities” above, "Business" in Item 1, and "Risk Factors" in Item 1A.

Debt Instruments and Financing Arrangements

Debt Instruments

OnIn ~~March 22~~2025, ~~2024~~we ~~(the~~actively ~~"Effective~~managed ~~Date")~~our ~~Lumen~~capital ~~Technologies,~~structure ~~Level~~through ~~3 Financing, Qwest and~~ a ~~group~~series of ~~creditors holding a majority of our consolidated debt completed~~ transactions ~~contemplated~~designed ~~under~~to ~~the~~enhance ~~amended~~financial flexibility and ~~restated~~optimize transaction support agreement ("TSA") dated January 22, 2024 (the "TSA Transactions"), which included Level 3 Financing privately placing $1.575 billion aggregate principal amount of newly-issued first lien notes. As of December 31, 2024, our ~~long-term~~ debt ~~(including~~profile ~~current~~to ~~maturities~~address ~~and~~upcoming ~~finance~~maturities ~~leases but excluding unamortized (discounts) premiums, net~~ and ~~unamortized~~support ~~debt~~ongoing ~~issuance~~transformation ~~costs) outstanding totaled $10~~initiatives.~~0 billion,~~ ~~approximately~~These ~~$8.8 billion~~transactions ofreduced ~~which~~consolidated isindebtedness ~~secured. For more information on the terms~~ and ~~impact~~extended ~~of these March 2024 transactions~~ our ~~consolidated~~weighted-average debt, ~~see~~maturity ~~Note 7—Long-Term Debt to our consolidated financial statements in Item 8 of Part II of this report~~profile.

~~Pursuant~~Key todebt ~~exchange~~balances ~~offers~~as ~~commenced~~of onDecember ~~September 3~~31, ~~2024~~2025 (the "Exchange Offers"), on September 24, 2024, Level 3 Financing issued $350 million aggregate principal amount of its newly-issued 10.000% Second Lien Notes due 2032 in exchange for $357 million aggregate principal amount of two series of its outstanding senior unsecured notes maturing in 2027 (which were concurrently cancelled). These transactions reduced the aggregate principal amount of Level 3 Financing's consolidated indebtedness by approximately $7 million.included:

42•Secured debt outstanding: $7.5 billion

•Unsecured debt outstanding: $2.1 billion

For additional details on our debt and financing instruments and the debt activity below, see Note 7 — Long-Term Debt and Credit Facilities in Item 8.

2025 Debt Activity

Key transactions in 2025 included:

•Second Lien Notes Refinancing and Cash Tender Offers — Fourth Quarter: Level 3 Financing Inc. issued $1.25 billion of 8.500% Senior Notes due 2036. Net proceeds, along with cash on hand, were used to retire the following of Level 3 Financing, Inc.'s Second Lien notes pursuant to cash tender offers:

◦$434 million 3.875% Second Lien Notes due 2030;

◦$703 million 4.500% Second Lien Notes due 2030; and

◦$432 million 4.000% Second Lien Notes due 2031.

•Term Loan Repayments — Fourth Quarter: Level 3 Financing, Inc. repaid all $12 million of the outstanding former Term Loan B facilities due 2027.

•Second Credit Facilities Refinancing — Third Quarter: Level 3 Financing Inc. amended and repriced its Term Loan B‑3 credit facility, replacing its Term Loan B‑3 with its Term Loan B‑4, maintaining $2.4 billion outstanding immediately following the transactions.

•First Lien Note Refinancings — Third Quarter: Level 3 Financing Inc. issued $2.425 billion of 7.000% First Lien Notes due 2034. Net proceeds, and cash on hand, were used to redeem Level 3 Financing, Inc.'s then outstanding First Lien notes totaling $2.1 billion, including:

◦$1.4 billion First Lien 11.000% Senior Secured Notes due 2029; and

◦$678 million 10.750% First Lien Notes due 2030.

•Cash Redemption — Third Quarter: Level 3 Financing Inc. redeemed $350 million of its 10.000% Second Lien Notes due 2032 in exchange for cash.

•First Lien Note Refinancing — Second Quarter: Level 3 Financing Inc. issued $2.0 billion of 6.875% First Lien Notes due 2033. Net proceeds, and cash on hand, were used to redeem Level 3 Financing, Inc.'s then outstanding higher-coupon notes totaling $1.8 billion, including:

◦$925 million First Lien 10.500% Senior Secured Notes due 2030;

◦$668 million 10.500% First Lien Notes due 2029; and

◦$167 million 11.000% First Lien Notes due 2029.

•First Credit Facilities Refinancing — First Quarter: Level 3 Financing, Inc. amended and repriced its Term Loan B‑1 and Term Loan B-2 credit facilities, replacing its Term Loan B-1 and B-2 with its Term Loan B-3, maintaining $2.4 billion outstanding immediately following the transaction, and extending maturity to 2032.

•Cash Redemptions — First Quarter: Level 3 Financing Inc. redeemed $70 million of unsecured Senior notes in exchange for cash.

For more details on the 2025 debt activity, see Note 7 — Long-Term Debt and Credit Facilities in Item 8.

2026 Debt Activity

Key transactions in early 2026 included:

•Senior Secured Notes: Level 3 Financing Inc. issued an additional $650 million of its 8.500% Senior Notes due 2036. Net proceeds from this offering were used to fund the purchase of $607 million of its Second Lien notes, including:

◦$595 million 4.875% Second Lien Notes due 2029;

◦$8 million 4.500% Second Lien Notes due 2030; and

◦$4 million 3.875% Second Lien Notes due 2030.

Future Debt Transactions

Subject to market conditions, we ~~plan~~expect to continue toissuing ~~issue~~ debt securities ~~from~~as ~~time~~needed to ~~time to~~ refinance ~~a substantial portion of our~~ maturing ~~debt~~obligations, ~~including issuing debt securities of certain of our subsidiaries to refinance their maturing debt to the extent permitted under debt covenants and~~ consistent with our capital allocation strategies. ~~The~~and ~~availability~~covenants. Availability, interest ~~rate~~rates, and other terms of ~~any~~ new borrowings will depend on ~~the~~credit ratings ~~assigned~~and bymarket ~~credit rating agencies~~conditions, among other factors.

~~As of the filing date of this report, the credit ratings for the senior secured and unsecured debt of Level 3 Financing were as follows:~~40

Borrower

Moody's Investors Service, Inc.

Standard & Poor's

Fitch Ratings

Level 3 Financing, Inc.

Unsecured

Caa1

CCC-

Secured

B2/Caa1

CCC+

B+/CCC

As of the filing date of this report, credit ratings for the senior secured and unsecured debt of Level 3 Financing were:

Our 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. With the recent downgrades of our credit ratings, we may find it more difficult to borrow on favorable terms, or at all. See "Risk Factors—Financial Risks" in Item 1A of Part I of this report.

Borrower

Moody's Investors Service, Inc.

Standard & Poor's

Fitch Ratings(1)

Level 3 Financing, Inc.

Unsecured

B-

Secured

Ba3

B+

_______________________________________________________________________________

~~From~~(1) ~~time~~In toFebruary ~~time over the past couple of years~~2026, weMoody's ~~have engaged in various debt refinancings, redemptions, tender offers, exchange offers, open market purchases~~ and ~~other~~Fitch ~~transactions~~upgraded ~~designed principally to reduce~~ our ~~consolidated~~secured ~~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~~unsecured ~~limitations,~~notes ~~we expect to opportunistically pursue similar transactions in the future to the extent feasible~~ratings. ~~See Note 7—Long-Term Debt to our consolidated financial statements in Item 8 of Part II of this report for additional information.~~

Future changes in these ratings, or Lumen's ratings, could impact our access to capital and borrowing costs. We cannot be certain that we will be able to borrow additional funds on favorable terms, or at all. See "Risk Factors — Financial Risks" in Item 1A.

Letters of Credit

It is customary for us to use various financial instruments in the normal course of business. These instruments include letters of credit. ~~Letters~~which ~~of credit~~ are conditional commitments issued on our behalf in accordance with specified terms and conditions. As of December 31, ~~2024~~2025, we had outstanding letters of credit or other similar obligations of approximately $2 million, all of which were collateralized by restricted cash.

Future Contractual Obligations

~~Our~~We ~~estimated~~maintain ~~future~~ obligations asrelated ofto ~~December 31, 2024 include both current and long term obligations. For our long-term~~ debt ~~as noted in Note 7—Long-Term Debt~~, ~~we have a current obligation of $36 million and a long-term obligation of $10.0 billion of long-term debt (excluding unamortized premiums, net and unamortized debt issuance costs). Under our operating~~ leases ~~as noted in Note 5—Leases~~, we have a current obligation of $326 million and a long-term obligation of $1.0 billion. As noted in Note 16—Commitments, Contingencies and Other Items, we have a current obligation related to right-of-way agreements and purchase commitments, ~~of $187 million~~ and aasset ~~long-term obligation of $582 million~~retirement. ~~Additionally,~~Our weestimated ~~have~~future aobligations ~~current~~as ~~asset retirement obligation~~ of ~~$16~~December ~~million~~31, ~~and~~2025 ~~a long-term obligation of $81 million.~~include:



	Footnote Reference	Current Obligation (within next 12 months)		Long-term Obligation (beyond next 12 months)	Total
		(Dollars in millions)
Long-term debt (excluding unamortized premiums, net and unamortized debt issuance costs)	Note 7 — Long-Term Debt and Credit Facilities	$	36	9,789	9,825
Operating leases	Note 5 — Leases	303		969	1,272
Right-of-way agreements and purchase commitments	Note 16 — Commitments, Contingencies and Other Items	194		644	838
Asset retirement obligations	Note 9 — Property, Plant and Equipment	16		79	95
Total		$	549	11,481	12,030

Distributions and Contributions

From time to time, we make distributions to and receive contributions from our ~~controlling~~ultimate parent company, which decrease or increase our capital resources available for debt repayments and other purposes. For additional ~~information~~details, see our consolidated statements of member’s (deficit) equity and consolidated statements of cash flows.

4341

Cash Flow Activities

The following table summarizes our consolidated cash flow activities:

	Years Ended December 31,			$ Change
	2024		2023
	(Dollars in millions)
Net cash provided by operating activities	$	3,131	1,621	1,510
Net cash (used in) provided by investing activities	(2,204)		872	3,076
Net cash used in financing activities	(2,345)		(637)	1,708

Operating Activities

Net cash provided by operating activities increased by $1.5 billion for the year ended December 31, 2024 compared to the year ended December 31, 2023, primarily due to advance cash payments received in the third quarter of 2024 pursuant to our recent PCF transactions. This increase was additionally impacted by a lower net loss. Cash provided by operating activities is subject to variability period over period as a result of timing, including the collection of receivables and payments of interest, accounts payable, and bonuses.

Investing Activities

Net cash (used in) provided by investing activities changed by $3.1 billion for the year ended December 31, 2024 compared to the year ended December 31, 2023, primarily due to an issuance of notes receivable - affiliate to our ultimate parent company under the credit facilities described elsewhere herein as well as a decrease in proceeds from the sale of businesses in 2023.

Financing Activities

Net cash used in financing activities increased by $1.7 billion for the year ended December 31, 2024 compared to the year ended December 31, 2023, due to an increase in distributions paid to our parent, partially offset by proceeds from issuance of new debt.

Other Matters

WeLegal ~~are~~Proceedings ~~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 16—Commitments, Contingencies and Other ~~Items~~Contingent ~~for additional information.~~Liabilities

~~Lumen~~We ~~Technologies~~are issubject ~~involved~~to invarious ~~several~~ legal proceedings toand ~~which~~other wecontingent ~~are~~liabilities ~~not a party~~ that, ifindividually ~~resolved~~or ~~against~~in ~~it,~~the aggregate could ~~have~~materially aaffect ~~material~~our ~~adverse effect on its business and~~ financial condition., Asfuture aresults ~~wholly owned subsidiary~~ of ~~Lumen Technologies~~operations, ~~our~~or ~~business~~cash ~~and financial condition could be similarly affected~~flows. ~~You~~See ~~can~~Note ~~find~~16 ~~descriptions~~— ofCommitments, ~~these~~Contingencies ~~legal proceedings in Lumen's quarterly~~ and ~~annual~~Other ~~reports~~Items ~~filed with the SEC. Because we are not a party to any of the matters, we have not accrued any liabilities~~ for ~~these~~additional ~~matters~~information.

~~Federal~~Lumen ~~officials~~Technologies ~~have~~is ~~proposed~~involved ~~changes~~in toseveral ~~current~~legal ~~programs~~proceedings ~~and~~to ~~laws~~which ~~that~~we ~~could~~are ~~impact~~not ~~us,~~a ~~including~~party ~~proposals designed to increase broadband access~~that, ~~increase~~if ~~competition~~resolved ~~among~~against ~~broadband providers~~it, ~~lower~~could ~~broadband~~have ~~costs~~a ~~and~~material ~~increase~~adverse ~~broadband~~effect ~~regulation.~~on Inits ~~late~~business ~~2021,~~and ~~the~~financial Ucondition.S. ~~Congress~~As ~~enacted~~a ~~legislation~~wholly ~~that~~owned ~~appropriated~~subsidiary ~~$65~~of ~~billion~~Lumen toTechnologies, ~~improve~~our ~~broadband~~business ~~affordability~~ and ~~access,~~financial ~~primarily~~condition ~~through~~could ~~federally~~be ~~funded~~similarly ~~state grants~~affected. AsYou ofcan ~~the~~find ~~date~~descriptions of ~~this~~these ~~report,~~legal ~~various~~proceedings ~~state~~in Lumen's quarterly and ~~federal~~annual ~~agencies~~reports ~~are~~filed ~~continuing~~with tothe ~~take~~SEC. ~~steps~~Because towe ~~make~~are ~~this~~not ~~funding~~a ~~available~~party to ~~eligible~~any ~~applicants,~~of ~~including~~the ~~us.~~matters, ~~Although~~we ithave ~~remains~~not ~~premature~~accrued toany ~~speculate~~liabilities onfor ~~the~~these ~~potential~~matters ~~impact~~as of ~~this~~December ~~legislation~~31, ~~on us~~2025.

~~Market~~Federal ~~Risk~~Broadband Support Programs

AsFederal ofofficials ~~December~~continue ~~31,~~to ~~2024~~advance broadband‑related proposals, weand ~~were~~Congress ~~exposed~~has authorized a $65 billion program to ~~market~~expand ~~risk~~broadband ~~from~~affordability ~~changes~~and access. State and federal agencies are in ~~interest~~the ~~rates~~process onof ~~our~~implementing ~~variable~~these ~~rate~~initiatives, ~~long-term~~and ~~debt~~we ~~obligations~~expect that the release of associated funding may increase competition in newly served markets.

Tax Law Changes

In July 2025, the U.S. enacted H.R. 1, also known as the “One, Big Beautiful Bill Act” (the “OBBBA”), which permanently allows 100% bonus depreciation, immediate expensing for domestic R&D, and favorable changes to interest expense limitations. These provisions did not have a material impact on our 2025 effective tax rate but are expected to significantly reduce the utilization of our federal NOLs.

The Organization for Economic Co-operation and Development ("OECD") has issued Pillar Two model rules introducing a new global minimum corporate tax of 15% for tax years effective after December 31, 2023. While the U.S. has not adopted Pillar Two legislation, certain countries in which we operate have already adopted legislation to implement Pillar Two. On January 5, 2026, the OECD announced the Side-by-Side ("SbS") package, implemented as administrative guidance and modifying the operation of Pillar Two rules that would fully exempt U.S.-parented groups from the application of certain Pillar Two top-up taxes. The SbS package also extends the current Transitional Country-by-Country Reporting ("CbCR") Safe Harbor by one year, through the end of fiscal year of 2027.The Pillar Two rules have increased our compliance requirements but did not materially impact our 2025 results. We continue to monitor evolving global and domestic tax legislation and administrative guidance.

CRITICAL ACCOUNTING ESTIMATES

The preparation of our consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of our assets, liabilities, revenue, and expenses. Certain policies and estimates are considered critical because they involve significant judgments and assumptions and could materially impact our financial statements. These include:

•intangible assets;

•loss contingencies;

•affiliate transactions; and

•income taxes.

While we believe our estimates are reasonable based on information available at the time they were made, actual results may differ and could be material.

Intangible Assets

We have a significant amount of finite-lived intangible assets that are subject to annual reviews of their estimated lives and amortization methods. As of December 31, 2025, our finite-lived intangible assets totaled $2.9 billion, or 17% of our total assets. The impairment analyses of these assets are considered critical because of their significance to us, the subjective nature of certain assumptions used to estimate fair value, and because it can materially impact reported results and future expense.

Amortization

Intangible assets acquired in business combinations — such as goodwill, customer relationships, capitalized software, trademarks, and trade names — are recorded at estimated fair value at acquisition. Other intangible assets not arising from business combinations, primarily capitalized software, are initially recorded at cost.

We amortize finite-lived intangible assets using the straight-line method over the following estimated lives:

•Customer relationships: 7 - 14 years

•Capitalized software: 3 - 7 years

The amount of future amortization expense may differ materially from current amounts, depending on the results of our annual reviews. For additional information on our intangible assets, see Note 3 — Intangible Assets.

Loss Contingencies

We are involved in several potentially material legal proceedings, as described in Note 16 — Commitments, Contingencies and Other Items in Item 8. Accounting for these matters requires significant judgment due to inherent uncertainty, complex legal interpretations, and evolving circumstances. We recognize an expense when a loss is probable and reasonably estimable. Determining whether a loss is probable and reasonably estimable involves significant judgment and assumptions about future events. These assumptions include legal interpretations, regulatory developments, and estimates of potential exposure. Actual outcomes may differ from these estimates, and such differences could materially affect our consolidated financial statements. Changes in assumptions or new developments could significantly increase or decrease earnings.

We evaluate these and other pending or threatened tax and legal matters on a quarterly basis.

Affiliate Transactions

Because of the significance of the services we provide to our affiliates and our other affiliate transactions, and the services our affiliates provide to us, the results of operations, financial position and cash flows presented herein are not necessarily indicative of the results of operations, financial position and cash flows we would have achieved had we operated as a stand-alone entity during the periods presented. Regarding telecommunications services that we received from our affiliates, we saw a reduction to affiliate expense for the year ended December 31, 2025. This is primarily due to the repricing of certain services provided to us to align with lower market rates including certain transport services, along with the termination of certain affiliate circuits that we no longer need to provide services to our external customers. See Note 15 — Affiliate Transactions for additional information.

Affiliate transactions are considered a critical accounting estimate because they involve significant judgment in determining pricing, allocation of costs, and the nature of services exchanged, all of which can materially impact reported results.

Income Taxes

Given the significant judgment, inherent complexity, uncertainty of outcomes, varying internal and external factors, and overall potential to materially impact our financial results, we consider various aspects related to income taxes to be critical accounting estimates.

Uncertain Tax Positions

We apply the “more-likely-than-not” threshold when determining uncertain tax positions. This involves significant uncertainty because it requires management to apply judgment and make assumptions when estimating exposures related to various tax positions. We do not recognize any portion of an uncertain tax position if, in our judgment, the position has less than a 50% likelihood of being sustained. The validity of any tax position is ultimately a matter of tax law; the body of statutory, regulatory, and interpretive guidance on the application of the law is complex and often ambiguous, particularly in certain non-U.S. jurisdictions in which we operate. As such, our judgments may not be upheld, which could materially affect our consolidated financial statements. Although we believe we have adequately reserved for our uncertain tax positions, no assurance can be given that the final tax outcome of these matters will not be adverse and exceed the amount reserved. We evaluate these tax matters on a quarterly basis.

Deferred Taxes

Our provision for income taxes includes amounts for current and deferred tax consequences. Deferred tax assets and liabilities reflect future tax effects of:

•tax credit carryforwards;

•differences between financial statement carrying values of assets and liabilities and tax basis of those assets and liabilities; and

•NOLs and other tax attribute carryforwards.

Deferred taxes are computed using enacted tax rates expected to apply in the year in which the temporary differences are expected to affect taxable income. Changes in tax rates impacting deferred income tax assets and liabilities are recognized in earnings in the period of enactment.

The measurement of deferred taxes requires significant judgment related to the realization of tax basis. We evaluate whether tax positions taken in filed returns are more likely than not to be sustained upon audit. Determining applicable tax rates and timing of reversals involves judgment about future income apportionment among jurisdictions. Changes in our practices or these judgments could materially affect our financial condition and results of operations.

AsValuation of December 31, 2024, we had approximately $9.8 billion (excluding unamortized (discounts) premiums, net, unamortized debt issuance costs and finance leases) of long-term debt outstanding, approximately $7.4 billion of which bears interest at fixed rates and is therefore not exposed to interest rate risk and approximately $2.4 billion of which is unhedged floating rate debt based on the secured overnight financing rate ("SOFR"). A hypothetical increase of 100 basis points in SOFR relating to our debt would, among other things, decrease our annual pre-tax earnings by approximately $24 million.Allowances

~~Certain~~We ~~shortcomings~~establish ~~are~~valuation ~~inherent~~allowances inwhen ~~the~~it ~~method~~is ofmore ~~analysis~~likely ~~presented~~than innot ~~the~~that ~~computation~~some ofor ~~exposures~~all todeferred ~~market~~tax ~~risks~~assets will not be realized. ~~Actual~~This ~~values~~assessment ~~may~~considers ~~differ~~recent ~~materially~~pre-tax ~~from~~earnings, ~~those~~forecasts ~~disclosed~~of byfuture usearnings, ~~from~~and ~~time~~the totiming ~~time~~and ifnature ~~market~~of ~~conditions~~deductions ~~vary~~and ~~from~~benefits, ~~the~~all ~~assumptions~~of ~~used~~which ininvolve the ~~analyses~~exercise ~~performed~~of significant judgment. ~~These~~We ~~analyses~~review ~~only~~valuation ~~incorporate~~allowances ~~the~~quarterly ~~risk~~and ~~exposures~~adjust ~~that~~as ~~existed~~needed atfor ~~December~~changes 31in tax law, ~~2024~~interactions with taxing authorities, developments in case law, or other relevant factors.

As of December 31, 2025, we had a valuation allowance of $107 million, primarily related to state NOLs expected to expire unused. Future changes in earnings forecasts or the nature and estimated timing of future deductions and benefits may require adjustments to valuation allowances, which could materially impact our financial condition or results of operations.

We evaluate tax matters on a quarterly basis; see Note 13 — Income Taxes in Item 8 for additional details.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

~~The~~As ~~information~~of inDecember ~~"Management's~~31, ~~Discussion~~2025, ~~and~~we ~~Analysis~~are ofexposed ~~Financial~~to ~~Condition~~market ~~and~~risk ~~Results~~primarily offrom ~~Operations—Market~~changes ~~Risk"~~ in ~~Item~~interest 7rates ofon ~~Part~~our IIvariable-rate oflong-term ~~this~~debt ~~report is incorporated herein by reference~~obligations.

Interest Rate Risk

As of December 31, 2025, we had approximately $2.4 billion aggregate principal amount of debt bearing unhedged floating interest rates based on the secured overnight financing rate ("SOFR"). A hypothetical increase of 100 basis points in SOFR relating to our unhedged floating rate debt would, among other things, decrease our annual pre-tax earnings by approximately $24 million.

ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Member

Level 3 Parent, LLC:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Level 3 Parent, LLC and subsidiaries (the Company) as of December 31, ~~2024~~2025 and ~~2023~~2024, the related consolidated statements of operations, comprehensive loss, cash flows, and member’s (deficit) equity for each of the years in the three-year period ended December 31, ~~2024~~2025, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, ~~2024~~2025 and ~~2023~~2024, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, ~~2024~~2025, in conformity with U.S. generally accepted accounting principles.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit ~~Matter~~Matters

The critical audit ~~matter~~matters communicated below isare amatters ~~matter~~ arising from the current period audit of the consolidated financial statements that ~~was~~were communicated or required to be communicated to those charged with governance and that: (1) ~~relates~~relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit ~~matter~~matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit ~~matter~~matters below, providing separate opinions on the critical audit ~~matter~~matters or on the accounts or disclosures to which they relate.

Testing of revenue

As discussed in Note 4 to the consolidated financial statements, the Company recorded $6.5 billion of operating revenues for the year ended December 31, ~~2024~~2025. The processing and recording of revenue are reliant upon multiple information technology (IT) systems.

We identified the evaluation of the sufficiency of audit evidence over revenue as a critical audit matter. Complex auditor judgment was required in evaluating the sufficiency of audit evidence over revenue due to the large volume of data and the number and complexity of the revenue accounting systems. Specialized skills and knowledge were needed to test the IT systems used for the processing and recording of revenue.

The following are the primary procedures we performed to address this critical audit matter. We applied auditor judgment to determine the nature and extent of procedures to be performed over the processing and recording of revenue, including the IT systems tested. We evaluated the design and tested the operating effectiveness of certain internal controls related to the processing and recording of revenue. This included manual and automated controls over the IT systems used for the processing and recording of revenue. For a selection of transactions, we compared the amount of revenue recorded to a combination of Company internal data, executed contracts, and other relevant third-party data. In addition, we involved IT professionals with specialized skills and knowledge who assisted in the design and performance of audit procedures related to certain IT systems used by the Company for the processing and recording of revenue. We evaluated the sufficiency of audit evidence obtained by assessing the results of procedures performed, including the relevance and reliability of evidence obtained.

Sufficiency of audit evidence over the implementation of enterprise resource planning system

The Company implemented the first phase of a new enterprise resource planning system (the ERP implementation) during the fourth quarter of 2025. The ERP implementation impacted a high volume of transactions, substantially all financial statement account balances, and certain disclosures.

We identified the evaluation of the sufficiency of audit evidence over the ERP implementation as a critical audit matter. Complex auditor judgment and the involvement of information technology (IT) professionals with specialized skills and knowledge were required to evaluate general IT controls and IT application controls of certain IT applications.

•obtaining an understanding of the relevant IT applications

•evaluating the design and testing the operating effectiveness of certain general IT controls, including controls related to program development, change management, and logical access

•evaluating the design and testing the operating effectiveness of certain IT application controls, including inspecting and evaluating configurations and interfaces.

We evaluated the sufficiency of audit evidence obtained by assessing the results of procedures performed, including the appropriateness of the nature and extent of the audit effort.

/s/ KPMG LLP

We have served as the Company’s auditor since 2002.

Denver, Colorado

February 20, ~~2025~~2026

LEVEL 3 PARENT, LLC

CONSOLIDATED STATEMENTS OF OPERATIONS

Years Ended December 31,

2024

2023

2022

2025

2024

2023

(Dollars in millions)

OPERATING REVENUE

Operating revenue

6,~~234~~265

6,~~813~~234

76,~~266~~813

Operating revenue - affiliates

~~262~~278

~~224~~262

~~227~~224

Total operating revenue

6,~~496~~543

76,~~037~~496

7,~~493~~037

OPERATING EXPENSES

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

2,~~720~~841

32,~~028~~720

3,~~229~~028

Selling, general and administrative

1,~~227~~180

1,~~360~~227

1,~~188~~360

Net loss on sale of businesses

123

493

Net loss on sale of business

—

123

Operating expenses - affiliates

1,~~066~~059

~~781~~1,066

~~659~~781

Depreciation and amortization

1,~~405~~374

1,~~400~~405

1,~~534~~400

Goodwill impairment

—

~~1,970~~—

41,~~638~~970

Total operating expenses

6,~~435~~454

86,~~662~~435

118,~~741~~662

OPERATING INCOME (LOSS)

6189

~~(1,625)~~61

(41,~~248~~625)

OTHER (EXPENSE) INCOME

OTHER EXPENSE

Interest expense

(~~819~~751)

(~~458~~819)

(~~374~~458)

Interest income - affiliate

~~245~~287

62245

Net gain on early retirement of debt (Note 7)

119

—

Net (loss) gain on early retirement of debt (Note 7)

(739)

119

—

Other income, net

8376

1583

Total other expense, net

(~~372~~1,127)

(~~381~~372)

(~~289~~381)

LOSS BEFORE INCOME TAXES

(~~311~~1,038)

(~~2,006~~311)

(42,~~537~~006)

Income tax (benefit) expense

(35)

(2)

256

Income tax benefit

(258)

(35)

(2)

NET LOSS

(~~276~~780)

(~~2,004~~276)

(42,~~793~~004)

See accompanying notes to consolidated financial statements.

LEVEL 3 PARENT, LLC

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

	Years Ended December 31,
	2024		2023	2022
	2025		2024	2023
	(Dollars in millions)
NET LOSS	$	(~~276~~780)	(~~2,004~~276)	(42,~~793~~004)
OTHER COMPREHENSIVE INCOME
Reclassification of realized loss on foreign currency translation to net loss on sale of businesses, net of $—, $—, and $— tax	—		350	112
Reclassification of realized loss on foreign currency translation to net loss on sale of business, net of $—, $—, and $— tax	—		—	350
Defined benefit pension plan adjustment, net of $—, $— and $— tax	—		—	18
Reclassification of net actuarial loss to net loss on the sale of businesses, net of $—, $— and $— tax	—		—	(22)
Reclassification of net actuarial loss to net loss on the sale of businesses, net of $—, $— and $— tax	—		(22)	—
Foreign currency translation adjustment, net of $—, $— and $(3) tax	12		2	(12)
Foreign currency translation adjustment, net of $—, $(3) and $58 tax	2		(12)	(123)
Other comprehensive income, net of tax	12		2	316
Other comprehensive income, net of tax	2		316	7
COMPREHENSIVE LOSS	$	(768)	(274)	(1,688)
COMPREHENSIVE LOSS	$	(274)	(1,688)	(4,786)

See accompanying notes to consolidated financial statements.

LEVEL 3 PARENT, LLC

CONSOLIDATED BALANCE SHEETS

	As of December 31,
	December 31,
	2024		2023
	2025		2024
	(Dollars in millions)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	~~600~~380	~~2,017~~600
Accounts receivable, less allowance of $12 and $13	532		545
Accounts receivable, less allowance of $16 and $12	767		532
Note receivable - affiliate	2,668		1,466
Notes receivable - affiliate	2,668		2,668
Other	246		244
Other current assets, net	303		246
Total current assets	4,~~046~~118		4,~~272~~046
Property, plant and equipment, net of accumulated depreciation $4,139 and $3,665	7,554		7,398
Property, plant and equipment, net of accumulated depreciation $4,772 and $4,139	9,030		7,554
OTHER ASSETS
Intangible assets, net	32,~~569~~943		43,~~237~~569
Other, net	1,257		1,346
Other assets, net	1,562		1,257
Total other assets	4,~~826~~505		54,~~583~~826
TOTAL ASSETS	$	1617,~~426~~653	1716,~~253~~426
LIABILITIES AND MEMBER'S EQUITY
LIABILITIES AND MEMBER'S (DEFICIT) EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt	$	36	3136
Accounts payable	~~294~~803		~~392~~294
Accounts payable - affiliates	~~241~~312		37241
Accrued expenses and other liabilities
Salaries and benefits	~~179~~217		~~195~~179
Income and other taxes	~~116~~130		~~105~~116
Current operating lease liabilities	~~266~~241		~~288~~266
Interest	~~124~~86		82124
Other	64		78
Other current liabilities	59		64
Current portion of deferred revenue	~~529~~756		~~300~~529
Total current liabilities	12,~~849~~640		1,~~508~~849
LONG-TERM DEBT	9,~~629~~627		89,~~952~~629
DEFERRED REVENUE AND OTHER LIABILITIES
Deferred revenue	36,~~392~~054		13,~~623~~392
Operating lease liabilities	~~719~~717		~~845~~719
Other	641		709
Other liabilities	387		641
Total deferred revenue and other liabilities	47,~~752~~158		34,~~177~~752
COMMITMENTS AND CONTINGENCIES (Note 16)
MEMBER'S EQUITY
MEMBER'S (DEFICIT) EQUITY
Member's equity	222		3,644
Member's (deficit) equity	(1,758)		222
Accumulated other comprehensive loss	(2614)		(2826)
Total member's equity	196		3,616
Total member's (deficit) equity	(1,772)		196
TOTAL LIABILITIES AND MEMBER'S EQUITY	$	16,426	17,253
TOTAL LIABILITIES AND MEMBER'S (DEFICIT) EQUITY	$	17,653	16,426

See accompanying notes to consolidated financial statements.

LEVEL 3 PARENT, LLC

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Years Ended December 31,
	2024		2023	2022
	2025		2024	2023
	(Dollars in millions)
OPERATING ACTIVITIES
NET LOSS	$	(~~276~~780)	(~~2,004~~276)	(42,~~793~~004)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	1,~~405~~374		1,~~400~~405	1,~~534~~400
Net loss on sale of businesses	17		123	493
Net loss on sale of business	—		17	123
Goodwill impairment	—		~~1,970~~—	41,~~638~~970
Impairment of long-lived assets	8340		983	39
Deferred income taxes	(52303)		(1052)	~~209~~(10)
Net gain on early retirement of debt	(119)		—	(8)
Net loss (gain) on early retirement of debt	739		(119)	—
Changes in current assets and liabilities:
Accounts receivable	6(251)		~~(23)~~6	10(23)
Accounts payable	~~(66)~~587		6(66)	~~(19)~~6
Other assets and liabilities, net	224		(39)	(131)
Other current assets and liabilities, net	82		224	(39)
Other assets and liabilities, affiliate	219		(26)	73
Other current assets and liabilities, affiliate	71		219	(26)
Changes in deferred revenue	12,~~769~~662		~~221~~1,769	~~101~~221
Changes in other noncurrent assets and liabilities, net	(33)		94	42
Changes in other assets and liabilities, net	(215)		(33)	94
Other, net	~~(46)~~60		(~~100~~46)	99(100)
Net cash provided by operating activities	34,~~131~~066		13,~~621~~131	21,~~251~~621
INVESTING ACTIVITIES
Capital expenditures	(12,~~076~~294)		(~~998~~1,076)	(~~1,198~~998)
Proceeds from sale of business	15—		~~1,746~~15	21,~~732~~746
Proceeds from sale of property, plant and equipment and other assets	599		~~136~~59	2136
Increase in notes receivable - affiliate	~~(1,202)~~—		—(1,202)	—
Other, net	—		~~(12)~~—	—(12)
Net cash (used in) provided by investing activities	(2,~~204~~285)		~~872~~(2,204)	~~1,536~~872
FINANCING ACTIVITIES
Net proceeds from issuance of long-term debt	18,~~325~~158		—1,325	—
Distributions	(3,156)		(586)	(1,425)
Payments of long-term debt	(8,315)		(514)	(38)
Contributions	210		—	—
Distributions	(1,200)		(3,156)	(586)
Payments of long-term debt	(514)		(38)	(2,387)
Contributions	—		210	—
Debt issuance and extinguishment costs and related fees	(~~210~~645)		(14210)	—(14)
Other	—1		1—	~~(2)~~1
Net cash used in financing activities	(2,~~345~~001)		(~~637~~2,345)	(~~3,814~~637)
Net (decrease) increase in cash, cash equivalents and restricted cash	(~~1,418~~220)		(1,~~856~~418)	~~(27)~~1,856
Cash, cash equivalents and restricted cash at beginning of period	~~2,020~~602		~~164~~2,020	~~191~~164
Cash, cash equivalents and restricted cash at end of period	$	~~602~~382	~~2,020~~602	~~164~~2,020
Supplemental cash flow information:
Income taxes paid, net	$	—(3)	~~(8)~~—	(108)
Interest paid (net of capitalized interest of $36, $22 and $16)	(723)		(433)	(387)
Interest paid (net of capitalized interest of $64, $36 and $22)	(727)		(723)	(433)
Supplemental non-cash information regarding financing activities:
Issuance of senior secured notes as part of exchange offers (Note 7)	$	—	924	—
Cancellation of term loans as part of refinancings (Note 7)	$	(2,267)	—	—
Distribution to Lumen Technologies in exchange for reduction of advances to affiliates	200		—	—
Issuance of term loans as part of refinancings (Note 7)	2,267		—	—
Issuance of senior secured notes as part of exchange offers (Note 7)	—		—	924
Distribution to Lumen Technologies in exchange for reduction of advances to affiliates	—		200	—
Cash, cash equivalents and restricted cash:
Cash and cash equivalents	$	~~600~~380	~~2,017~~600	~~118~~2,017
Cash and cash equivalents, and restricted cash included in assets held for sale	—		—	44
Restricted cash included in Other current assets, net	2		1	1
Restricted cash included in Other current assets	1		1	—
Restricted cash included in Other assets, net	—		1	2
Restricted cash included in Other, net noncurrent assets	1		2	2
Total	$	382	602	2,020
Total	$	602	2,020	164

See accompanying notes to consolidated financial statements.

LEVEL 3 PARENT, LLC

CONSOLIDATED STATEMENTS OF MEMBER'S (DEFICIT) EQUITY

	Years Ended December 31,
	2024		2023	2022
	2025		2024	2023
	(Dollars in millions)
MEMBER'S EQUITY
MEMBER'S (DEFICIT) EQUITY
Balance at beginning of period	$	~~3,644~~222	73,~~119~~644	137,~~337~~119
Net loss	(~~276~~780)		(~~2,004~~276)	(42,~~793~~004)
Distributions	(31,~~156~~200)		(13,~~510~~156)	(1,~~425~~510)
Contributions	~~210~~—		—210	—
Other	~~(200)~~—		39(200)	—39
Balance at end of period	~~222~~(1,758)		~~3,644~~222	73,~~119~~644
ACCUMULATED OTHER COMPREHENSIVE LOSS
Balance at beginning of period	(2826)		(~~344~~28)	(~~351~~344)
Other comprehensive income	212		~~316~~2	7316
Balance at end of period	(2614)		(2826)	(~~344~~28)
TOTAL MEMBER'S EQUITY	$	196	3,616	6,775
TOTAL MEMBER'S (DEFICIT) EQUITY	$	(1,772)	196	3,616

See accompanying notes to consolidated financial statements.

LEVEL 3 PARENT, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Unless the context requires otherwise, references in this report to "Level 3," “we,” “us,” "its," the “Company” and “our”, refer to Level 3 Parent, LLC and its predecessor, Level 3 Communications, Inc. and their respective subsidiaries. References to (i) "Lumen Technologies" or "Lumen" refer to our ultimate parent company, Lumen Technologies, Inc. and its consolidated subsidiaries, (ii) “Level 3 Financing” refer to our finance subsidiary, Level 3 Financing, Inc., and (iii) “Qwest” refers to Qwest Corporation, unless the context otherwise requires.

Note 1 — Background and Summary of Significant Accounting Policies

General

We are a leading digital networking services company ~~with~~empowering ~~the~~enterprise ~~goal~~businesses ofto fuel growth in a multi-cloud, AI-first marketplace by connecting people, data, and applications quickly, securely, and effortlessly. We are unleashing the world's digital potential by providing a broad array of integrated products and services to our domestic and global business customers. We operate one of the world’s most interconnected communications networks. Our platform empowers our customers to swiftly adjust digital programs to meet immediate demands, create efficiencies, accelerate market access, and reduce costs, which allows our customers to rapidly evolve their IT programs to address dynamic changes. Our specific products and services are detailed in Note 4 — Revenue Recognition.

Basis of Presentation

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

We reclassified certain prior period amounts to conform to the current period presentation, including our revenue by product and service categories for ~~2023~~2024 and ~~2022~~2023. See Note 4 — Revenue Recognition for additional information. These changes had no impact on total operating revenue, total operating expenses, or net loss for any period.

Segments

Our operations are integrated into and reported as part of Lumen Technologies' operations. Lumen's ~~CEO~~Chief isExecutive Officer serves as our chief operating decision maker ("CODM") and reviews our financial information on an aggregate basis ~~only~~ in connection with our quarterly and annual ~~reports that we file with the~~ SEC filings. Our CODM ~~assesses~~evaluates performance and allocates resources in conjunction with and based on the operations of Lumen Technologies. ~~Consequently~~Accordingly, we do not provide our discrete financial information to the CODM on a regular basis. Asand ~~such,~~have determined that we have one reportable segment.

Operating Expenses

Our current definitions of operating expenses are as follows:

•Cost of services and products (exclusive of depreciation and amortization): ~~are~~Expenses ~~expenses~~ incurred in providing products and services to our customers. These expenses include: employee-related expenses directly attributable to operating and maintaining our network (such as salaries, wages, benefits and professional fees); facilities expenses (which include third-party telecommunications expenses we incur for using other carriers' networks to provide services to our customers); rents and utilities expenses; equipment sales expenses; and other expenses directly related to our operations; and

•employee-related expenses directly attributable to operating and maintaining our network (e.g., salaries, wages, benefits, and professional fees);

•facilities expenses (e.g., third-party telecommunications expenses we incur for using other carriers' networks to provide services to our customers);

•rents and utilities expenses;

•~~Selling,~~equipment ~~general~~sales ~~and administrative~~ expenses ~~are corporate overhead and other operating expenses. These expenses include: employee-related expenses~~ (~~such as salaries~~e.g., ~~wages,~~modem ~~internal commissions, benefits and professional fees) directly attributable to selling products or services and employee-related~~ expenses ~~for administrative functions~~); ~~marketing~~ and advertising; property and other operating taxes and fees; external commissions; legal expenses associated with general matters; bad debt expense; and other selling, general and administrative expenses.

•other expenses directly related to our operations.

Selling, general and administrative expenses: Corporate overhead and other operating expenses. These expenses include:

•employee-related expenses directly attributable to selling products or services and employee-related expenses for administrative functions (e.g., salaries, wages, internal commissions, benefits and professional fees);

•marketing and advertising;

•property and other operating taxes and fees;

•external commissions;

•legal expenses associated with general matters;

•bad debt expense; and

•other selling, general, and administrative expenses.

These expense classifications may not be comparable to those of other companies.

Summary of Significant Accounting Policies

Use of Estimates

Our consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles. ~~These~~("GAAP") ~~accounting~~and ~~principles~~ require usmanagement to make ~~certain~~ estimates, ~~judgments~~ and assumptions. ~~We believe~~ that the estimates, judgments and assumptions we make when accounting for specific items and matters are reasonable, based on information available at the time they are made. These estimates, judgments and assumptions can materially affect ~~the~~ reported amounts of assets, liabilities, ~~and components of member's~~ equity ~~as of the dates of the consolidated balance sheets~~, ~~as well as the reported amounts of~~ revenue, expenses, and ~~components of~~ cash flows ~~during~~and ~~the~~related ~~periods presented in our other consolidated financial statements~~disclosures. WeThese ~~also make~~ estimates inare ~~our~~based ~~assessments~~on ofinformation ~~potential~~available ~~losses~~at inthe ~~relation~~time, toincluding ~~threatened~~historical ~~or pending tax~~ and ~~legal~~forward-looking ~~matters.~~factors, ~~See~~that ~~Note~~we ~~13—Income~~believe ~~Taxes~~are ~~and~~reasonable; ~~Note 16—Commitments~~however, ~~Contingencies~~these ~~and~~estimates ~~Other~~may ~~Items~~differ ~~for~~materially ~~additional~~from ~~information~~actual results.

We also make estimates in our assessments of potential losses in relation to threatened or pending tax and legal matters. See Note 13 — Income Taxes and Note 16 — Commitments, Contingencies and Other Items for additional information.

For matters not related to income taxes, if a loss is considered probable and the amount can be reasonably estimated, we recognize an expense for the estimated loss. If we have the potential to recover a portion of the estimated loss from a third-party, we make a separate assessment of recoverability and reduce the estimated loss if recovery is also deemed probable.

For matters related to income taxes, if we determine the impact of an uncertain tax position is more likely than not to be sustained upon audit by the relevant taxing authority, then we recognize a benefit for the largest amount that is more likely than not to be sustained. We do not recognize any portion of an uncertain tax position if the position has less than a 50% likelihood of being sustained. We recognize interest on the amount of unrecognized benefit from uncertain tax positions.

For all of these and other matters, actual results could differ materially from our estimates.

Revenue Recognition

We earn most of our consolidated revenue from contracts with customers, primarily through the provision of communications and other services. Revenue from contracts with customers is accounted for under Accounting Standards Codification ("ASC") 606. We also earn revenue from leasing arrangements (primarily from fiber capacity and colocation agreements) which are not accounted for under ASC 606.

Revenue is recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to receive in exchange for those goods or services. Revenue is recognized based on the following five-step model:

•Identification of the contract with a customer;

•Identification of the performance obligations in the contract;

•Determination of the transaction price;

•Allocation of the transaction price to the performance obligations in the contract; and

•Recognition of revenue when, or as, we satisfy a performance obligation.

WeRevenue provide an array of communications services to business customers, including local voice, VPN, Ethernet, data, broadband, private line (including special access), network access, transport, voice, information technology, video and other ancillary services. We provide these services to a wide range of businesses, including global, enterprise, wholesale, government, and small and medium business customers. Certain contracts also include the sale of equipment, which is not significant to our business.Recognition

We recognize revenue ~~for~~primarily ~~services~~from ~~when~~contracts wewith ~~provide~~customers ~~the~~for ~~applicable~~communications ~~service~~and orrelated ~~when~~services ~~control of a product is transferred. Recognition of certain payments received~~ in ~~advance~~accordance ofwith ~~services~~Accounting ~~being~~Standards ~~provided~~Codification isTopic ~~deferred. These advance payments may include design~~606, ~~planning~~"Revenue ~~and~~from ~~engineering~~Contracts ~~fees,~~with asCustomers" ~~well~~(“ASC ~~as certain activation and installation charges~~606”). IfRevenue ~~these~~is ~~advance~~measured ~~payments~~based ~~are~~on ~~not~~the ~~separate~~consideration ~~performance obligations,~~ we ~~recognize~~expect ~~them~~to asreceive ~~revenue~~and ~~over~~is ~~the~~recognized ~~actual~~when orcontrol ~~expected~~of ~~contract~~goods ~~term~~or ~~using~~services ~~historical~~transfers ~~experience, which typically ranges from one~~ to ~~five years depending on~~ the ~~service~~customer. InWe ~~most~~also ~~cases,~~earn ~~termination~~revenue ~~fees~~from orleasing ~~other~~arrangements ~~fees~~(e.g., onfiber ~~existing~~capacity ~~contracts~~and ~~that~~colocation ~~are~~agreements), ~~negotiated~~which ~~in conjunction with new contracts~~ are ~~deferred~~outside ~~and recognized over~~ the ~~new~~scope ~~contract~~of ~~term~~ASC 606.

Under ASC 606, revenue is recognized using the following five-step model:

•identification of the contract with a customer;

•identification of the performance obligations in the contract;

•determination of the transaction price;

•allocation of the transaction price to the performance obligations in the contract; and

•recognition of revenue when, or as, we satisfy a performance obligation.

Service and Equipment Revenue

We provide a broad range of communications services to business customers — including global, enterprise, wholesale, government, and small and medium business customers. Certain contracts include equipment sales, which are not significant to our operations. We recognize revenue for services when we provide the applicable service or when control of a product is transferred.

For arrangements using third-party vendors, we assess whether we act as a principal or agent to determine whether revenue is reported on a gross or net basis.

Performance Obligations

Customer contracts are evaluated to determine whether the performance obligations are separable. If the performance obligations are deemed separable and separate earnings processes exist, the transaction price is allocated to each performance obligation based on its relative standalone selling price. The revenue associated with each performance obligation is then recognized as when, or as, the performance obligation is satisfied.

Deferred Revenue and Fees

Payments received in advance — such as design, planning, engineering, activation, or installation fees — are deferred unless they represent separate performance obligations. When these payments are not separate obligations, we recognize them over the contract term or estimated useful life, typically one to five years, based on historical experience. Termination fees or other charges negotiated with new contracts are also deferred and recognized over the new contract term.

Billing Practices

For access services, we generally bill fixed monthly charges one month in advance to customers and recognize revenue as service is provided over the contract term in alignment with the customer's receipt of service. For usage and other ancillary services, we generally bill in arrears and recognize revenue as usage or delivery occurs. In most cases, the amount invoiced for our service offerings constitutes the price that would be billed on a standalone basis.

In certain cases, customers may be permitted to modify their contracts. We evaluate the change in scope or price to identify whether the modification should be treated as a separate contract, as a termination of the existing contract and creation of a new contract, or as a change to the existing contract.

Customer contracts are evaluated to determine whether the performance obligations are separable. If the performance obligations are deemed separable and separate earnings processes exist, the total transaction price that we expect to receive with the customer is allocated to each performance obligation based on its relative standalone selling price. The revenue associated with each performance obligation is then recognized as earned.

We periodically sell transmission capacity on our network. These transactions are generally structured as indefeasible rights of use, commonly referred to as IRUs, which are the exclusive right to use a specified amount of capacity or fiber for a specified term, typically 20 years. In most cases, we account for the cash consideration received on transfers of transmission capacity as ASC 606 revenue, which is adjusted for the time value of money and is recognized ratably over the term of the agreement. Cash consideration received on transfers of dark fiber is accounted for as non-ASC 606 lease revenue, which we also recognize ratably over the term of the agreement. We do not recognize revenue on any contemporaneous exchanges of our optical capacity assets for other non-owned optical capacity assets.

In connection with offering products and services provided to the end user by third-party vendors, we review the relationship between us, the vendor and the end user to assess whether revenue should be reported on a gross or net basis. In assessing whether revenue should be reported on a gross or net basis, we consider whether we act as a principal in the transaction and control the goods and services used to fulfill the performance obligations associated with the transaction.

We have service level commitments pursuant to contracts with certain of our customers. To the extent that we determine that such service levels were not achieved or may not have been achieved, we estimate the amount of credits to be issued and record a corresponding reduction to revenue in the period that the service level commitment was not met or may not be met.

Customer payments are made based on billing schedules included in our customer contracts, which is typically on a monthly basis.

We defer (or capitalize) incremental contract acquisition and fulfillment costs and recognize (or amortize) such costs over the average contract life. Our deferred contract costs for our customers have average amortization periods of approximately 36 months. These deferred costs are periodically monitored to reflect any significant change in assumptions.

See Note 4—Revenue Recognition for additional information.

Contract Costs

Contract Modifications

Indefeasible Rights of Use and Leases

We periodically sell transmission capacity on our network through indefeasible rights of use (“IRU”s), which grant the exclusive right to use a specified amount of capacity or fiber for a typical term of 20 years. Cash consideration received on transfers of transmission capacity is recognized as ASC 606 revenue, adjusted for time value of money and recognized ratably over the lease term. We treat contemporaneous exchanges of transmission capacity assets as non-revenue generating activities and therefore do not recognize revenue for these exchanges.

Service Level Commitments

Affiliate Transactions

We provide services to our affiliates that we also provide to external customers. ~~These~~Revenue from these services ~~are~~is recognized as ~~operating~~Operating revenue- – affiliates in our consolidated statements of operations. ~~Services~~Similarly, services provided to us from our affiliates are recognized as ~~operating~~Operating expenses- – affiliates onin our consolidated statements of operations. ~~Because~~Due ofto the significance of ~~the~~these ~~services~~intercompany wetransactions, ~~provide to~~ our ~~affiliates and our affiliates provide to us, the~~ results of operations, financial position, and cash flows ~~presented~~may ~~herein are~~ not ~~necessarily~~be indicative of ~~the~~what ~~results~~they ~~of operations, financial position and cash flows we~~ would have ~~achieved~~been had we operated as a stand-alone entity during the periods presented.

WeIntercompany ~~recognize~~charges ~~intercompany~~are ~~charges~~recognized at the amounts billed to us by our affiliates, and ~~we recognize~~ intercompany revenue is recognized for services we bill to our affiliates. The resulting net ~~balance~~balances ~~for~~from these transactions ~~between~~are ~~us and our affiliates at the end of each period is~~ reported as ~~accounts~~Accounts ~~receivables~~receivable -– affiliates or ~~accounts~~Accounts payable -– affiliates onin ~~the~~our ~~accompanying~~ consolidated balance sheets.

From time to time, to the extent permitted by our debt covenants, we make distributions to and receive contributions from our parent, which ~~decrease~~increase or ~~increase~~decrease our capital resources for debt ~~repayments~~repayment or other purposes. ~~Distributions~~These ~~and~~transactions ~~contributions~~ are reflected onin our consolidated statements of member'’s (deficit) equity, and ~~our~~related ~~consolidated statements of~~ cash flows ~~reflects~~are presented as distributions and contributions ~~made~~within as financing activities in our consolidated statements of cash flows. Non-cash distributions are ~~reflected~~disclosed in the supplemental non-cash ~~information regarding~~ financing ~~activities~~information in our consolidated statements of cash flows.

Our ultimate parent company, Lumen Technologies, is currently indebted to us under a revolving credit facility.

For additional information, see Note 15 — Affiliate Transactions.

Legal Costs

In the normal course of our business, we incur costs to hire and retain external legal counsel to advise us on finance, regulatory, litigation, and other matters. Subject to certain exceptions, we expense these costs as the related services are received.

Income Taxes

Lumen Technologies treats our consolidated results as if we were a separate taxpayer. Our reported deferred tax assets and liabilities, as discussed below and in Note 13—Income Taxes, are primarily determined as a result of the application of the separate return method and therefore the settlement of these amounts is dependent upon our parent, Lumen Technologies, rather than tax authorities. We are required to pay our tax liabilities based upon our separate return taxable income. We are also included in the combined state tax returns filed by Lumen Technologies. The provision for income taxes consists of an amount for taxes currently payable, an amount for tax consequences deferred to future periods and adjustments to our liabilities for uncertain tax positions. We record deferred income tax assets and liabilities reflecting future tax consequences attributable to tax NOLs, tax credit carryforwards and differences between the financial statement carrying value of assets and liabilities and the tax basis of those assets and liabilities. Deferred taxes are computed using enacted tax rates expected to apply in the year in which the differences are expected to affect taxable income. The effect on deferred income tax assets and liabilities of a change in tax rate is recognized in earnings in the period that includes the enactment date.

We establish valuation allowances when necessary to reduce deferred income tax assets to the amounts that we believe are more likely than not to be recovered. Each quarter we evaluate the need to retain or adjust each valuation allowance on our deferred tax assets. See Note 13—Income Taxes for additional information.

Income Taxes

Lumen Technologies treats our consolidated results as if we were a separate taxpayer. Our reported deferred tax assets and liabilities, as discussed below and in Note 13 — Income Taxes, are primarily determined as a result of the application of the separate return method and therefore the settlement of these amounts is dependent upon our parent, Lumen Technologies, rather than tax authorities. We are required to pay our tax liabilities based upon our separate return taxable income. We are also included in the combined state tax returns filed by Lumen Technologies. The provision for income taxes reflects taxes currently payable, tax consequences deferred to future periods and adjustments to our liabilities for uncertain tax positions. We record deferred income tax assets and liabilities reflecting future tax consequences attributable to tax attributes carryforwards, including NOL carryforwards and tax credit carryforwards and differences between the financial statement carrying value of assets and liabilities and the tax basis of those assets and liabilities. Deferred taxes are computed using enacted tax rates expected to apply in the year in which the differences are expected to affect taxable income. The effect on deferred income tax assets and liabilities of a change in tax rate is recognized in earnings in the period that includes the enactment date.

Cash and Cash Equivalents

Cash and cash equivalents include highly liquid investments that are readily convertible into cash and are not subject to significant risk from fluctuations in interest rates. As a result, the value at which cash and cash equivalents are reported in our consolidated financial statements approximates their fair value. In evaluating investments for classification as cash equivalents, we require that individual securities have original maturities of ninety days or less and that individual investment funds have dollar-weighted average maturities of ninety days or less. To preserve capital and maintain liquidity, we invest with financial institutions we deem to be of sound financial condition and in high quality and relatively risk-free investment products. Our cash investment policy limits the concentration of investments with specific financial institutions or among certain products and includes criteria related to credit worthiness of any particular financial institution.

Book overdrafts occur when we have issued checks but they have not yet been presented to our controlled disbursement bank accounts for payment. Disbursement bank accounts allow us to delay funding of issued checks until the checks are presented for payment. Until the issued checks are presented for payment, the book overdrafts are included in accounts payable on our consolidated balance sheets. This activity is included in the operating activities section in our consolidated statements of cash flows. ~~There were no book overdrafts included in accounts payable at December 31, 2024 or 2023, respectively.~~

Restricted Cash

Restricted cash ~~consist~~consists primarily of cash and investments that ~~serve to~~ collateralize our outstanding letters of credit and certain performance and operating obligations. Restricted cash is recorded as current or non-current assets in the consolidated balance sheets depending on the duration of the restriction and the purpose for which the restriction exists.

Accounts Receivable and Allowance for Credit Losses

Accounts receivable are recognized based upon the amount due from customers for the services provided or at cost for other receivables, less an allowance for credit losses. We use a loss rate method to estimate our allowance for credit losses. For more information on our methodology for estimating our allowance for credit losses, see Note 6 — Credit Losses on Financial Instruments.

We generally consider our accounts past due if they are outstanding over 30 days. Our past due accounts are written off against our allowance for credit losses and any recoveries ~~of accounts previously written off~~ are generally recognized as a reduction in bad debt expense in the period received. The carrying value of accounts receivable net of the allowance for credit losses approximates fair value.

Concentration of Credit Risk

We provide communications services to a wide range of wholesale and enterprise customers, ranging from well capitalized global enterprises to small early stage companies primarily in the United States. Credit risk with respect to accounts receivable is generally diversified due to the large number of entities comprising our customer base and their dispersion across many different industries and geographical regions. We perform ongoing credit evaluations of our customers' financial condition and generally require no collateral from our customers, although letters of credit and deposits are required in certain limited circumstances. We have, from time to time, entered into agreements with value added resellers and other channel partners to reach enterprise markets for voice services. We have policies and procedures in place to evaluate the financial condition of these resellers prior to initiating service to the final customer. We are not able to predict changes in the financial stability of our customers. Any material changes in the financial status of any one or a particular group of customers may cause us to adjust our estimate of the recoverability of receivables and could have a material effect on our results of operation.

Assets Held for Sale

WeAssets ~~classify assets~~ and related liabilities ~~as held for sale when: (i) management has committed to a plan to sell the assets, (ii) the net assets~~ are available for immediate sale, (iii) there is an active program to locate a buyer and (iv) the sale and transfer of the net assets is probable within one year. Assets and liabilities held for sale are presented separately on our consolidated balance sheets with a valuation allowance, if necessary, to recognize the net carrying amount at the lower of cost or fair value, less costs to sell. Depreciation of property, plant and equipment and amortization of finite-lived intangible assets and right-of-use assets are not recorded while these assets are classified as held for sale. For each period that assets are classified as being held for sale, they are tested for recoverability. See Note 2—Divestitures of the Latin American and EMEA Businesses and Note 9—Property, Plant And Equipment for additional information.when:

•management commits to a plan to sell the assets;

•the assets are available for immediate sale;

•an active program to locate a buyer is initiated; and

•the sale is probable within one year.

Assets and related liabilities held for sale are presented separately at the lower of (i) carrying amount or (ii) fair value less costs to sell. If the carrying amount exceeds fair value less cost to sell, a loss is recognized. Depreciation and amortization cease once assets are classified as held for sale. Assets classified as held for sale are remeasured each reporting period to ensure they are stated at the lower of (i) carrying amount or (ii) fair value less costs to sell.

Unless otherwise specified, the amounts and information presented in the notes do not include assets and liabilities that were classified as held for sale. See Note 2 — Divestiture and Note 9 — Property, Plant and Equipment for additional information.

Property, Plant and Equipment

WePurchased ~~record purchased~~ and constructed property, plant, and equipment are recorded at cost, ~~plus the estimated value of any associated legally or contractually required retirement obligations. We depreciate our property, plant~~ and ~~equipment~~assets ~~using~~acquired ~~the~~through ~~straight-line~~business ~~method.~~combinations ~~Leasehold improvements~~ are ~~amortized~~recorded ~~over~~at ~~the~~their ~~shorter~~estimated offair ~~the~~value ~~useful~~as ~~lives~~ of the ~~assets~~acquisition ~~or the expected lease term~~date. ~~Expenditures~~In ~~for~~both ~~maintenance~~instances ~~and~~we ~~repairs~~include ~~are expensed as incurred. During~~ the ~~construction~~estimated ~~phase~~value of ~~network~~any ~~and~~associated ~~other~~legally ~~internal-use~~or ~~capital~~contractually ~~projects,~~required weretirement ~~capitalize~~obligations. ~~related~~We ~~employee~~depreciate ~~and~~our ~~interest costs. Property~~property, plant and equipment ~~supplies~~using ~~used~~the ~~internally~~straight-line ~~are carried at average cost, except for significant individual items which are carried at actual cost~~method.

WeExpenditures ~~perform annual internal reviews to evaluate the reasonableness of the depreciable lives~~ for ~~our~~maintenance ~~property, plant~~ and ~~equipment.~~repairs ~~Our~~are ~~reviews~~expensed ~~take~~as ~~into account actual usage, the physical condition of our property, plant, and equipment, industry data, and other relevant factors~~incurred. ~~Our~~Supplies ~~remaining~~used ~~useful~~internally ~~life~~are ~~assessments~~carried ~~evaluate~~at ~~the~~average ~~possible loss in service value of assets that may precede the physical retirement. Assets shared among many customers may lose service value as those customers reduce their use of the asset. However~~cost, ~~the~~except ~~asset~~for issignificant ~~not~~individual ~~retired~~items ~~until~~which ~~all~~are ~~customers~~carried noat ~~longer~~actual ~~utilize the asset and we determine there is not alternative use for the asset~~cost.

WeLeasehold ~~have~~Improvements ~~asset retirement obligations associated with the legally or contractually required removal of a limited group of property, plant~~ and ~~equipment~~Capital assets from leased properties and the disposal of certain hazardous materials present in our owned properties. When an asset retirement obligation is identified, usually in association with the acquisition of the asset, we record the fair value of the obligation as a liability. The fair value of the obligation is also capitalized as property, plant and equipment and then amortized over the estimated remaining useful life of the associated asset. Where the removal obligation is not legally binding, we expense the net cost to remove assets in the period in which the costs are actually incurred.Projects

WeLeasehold ~~review~~improvements ~~long-lived~~are ~~tangible~~amortized ~~assets~~over ~~for impairment whenever facts and circumstances indicate that~~ the ~~carrying~~shorter ~~amounts~~ of the assets’ ~~may~~useful ~~not~~lives beor ~~recoverable. For assessment purposes, long-lived assets are grouped with other assets and liabilities at~~ the ~~lowest~~expected ~~identifiable~~lease ~~level for which we generate cash flows independently of other groups of assets and liabilities, absent a material change in operations~~term. AnDuring ~~impairment loss is recognized only if~~ the ~~carrying~~construction ~~amount~~phase of ~~the~~network ~~asset group is not recoverable~~ and ~~exceeds~~other ~~its~~internal-use ~~estimated~~capital fair value. Recoverability of the asset group to be held and used is assessed by comparing the carrying amount of the asset group to the estimated undiscounted future net cash flows expected to be generated by the asset group. If the asset group's carrying value is not recoverableprojects, we ~~recognize~~capitalize anrelated ~~impairment~~employee ~~charge~~and ~~for~~interest ~~the amount by which the carrying amount of the asset group exceeds its estimated fair value~~costs.

Goodwill, Customer Relationships and Other Intangible Assets

Intangible assets arising from business combinations, such as goodwill, customer relationships, capitalized software, trademarks and trade names, are initially recorded at estimated fair value. We amortize customer relationships primarily over an estimated life of seven to 14 years, using the straight-line method, depending on the type of customer. We amortize capitalized software using the straight-line method primarily over estimated lives ranging up to seven years. We amortized our other intangible assets over an estimated life of five years prior to becoming fully amortized in the fourth quarter of 2023. Other intangible assets not arising from business combinations are initially recorded at cost. Where there are no legal, regulatory, contractual or other factors that would reasonably limit the useful life of an intangible asset, we classify the intangible asset as indefinite-lived and such intangible assets are not amortized.

~~Internally~~Useful used software, whether purchased or developed by us, is capitalized and amortized using the straight-line method over its estimated useful life. We have capitalized certain costs associated with software such as costs of employees devoted to software development and external direct costs for materials and services. Costs associated with software to be used for internal purposes are expensed until the point at which the project has reached the development stage. Subsequent additions, modifications or upgrades to internal-use software are capitalized only to the extent that they allow the software to perform a task it previously did not perform. Software maintenance, data conversion and training costs are expensed in the period in which they are incurred. We review the remaining economic lives of our capitalized software annually. Capitalized software is included in other intangible assets, net, in our consolidated balance sheets.Lives

~~Prior~~We toperform ~~becoming~~annual ~~fully~~internal ~~impaired~~reviews into evaluate the ~~second~~reasonableness ~~quarter~~ of ~~2023,~~the wedepreciable ~~were~~lives ~~required~~for ~~to assess~~ our ~~goodwill for impairment annually~~property, orplant ~~more~~and ~~frequently~~equipment. ifOur anreviews ~~event~~utilize ~~occurred~~models ~~or circumstances changed~~ that ~~would~~take ~~indicate~~into itaccount ~~was~~actual ~~more~~usage, ~~likely~~physical ~~than~~wear ~~not~~and ~~the~~tear, ~~fair~~replacement ~~value~~history, ofand ~~our~~assumptions ~~reporting~~about ~~unit~~technology ~~was less than the carrying value~~evolution. ~~The~~Our ~~impairment~~remaining ~~assessment~~useful ~~was~~life ~~performed~~assessments atevaluate the ~~reporting~~possible ~~unit~~loss ~~level.~~in Weservice ~~have~~value ~~determined that our operations consist~~ of ~~one~~assets ~~reporting~~that ~~unit,~~may ~~consistent~~precede ~~with~~the ~~our~~physical ~~determination~~retirement. ~~that~~Assets ~~our~~shared ~~business~~among ~~consists~~many ofcustomers ~~one~~may ~~operating~~lose ~~segment.~~service Wevalue ~~were~~as ~~required~~those tocustomers ~~write-down~~reduce ~~the~~their ~~value~~use of ~~goodwill~~the inasset. ~~periods~~However, inthe ~~which~~asset ~~the~~is ~~carrying~~not ~~amount~~retired ofuntil ~~our~~all ~~reporting~~customers ~~unit's~~no ~~equity~~longer ~~exceeded~~utilize the ~~estimated~~asset ~~fair~~and ~~value~~we ofdetermine ~~the~~there ~~equity~~is ofno ~~the~~alternative ~~reporting~~use ~~unit,~~for ~~limited to~~ the ~~goodwill balance~~asset.

~~For~~Impairment ~~more information, see Note 3—Goodwill, Customer Relationships and Other Intangible Assets.~~Testing

~~Foreign~~We ~~Currency~~review long-lived tangible assets for impairment whenever facts and circumstances indicate that the carrying amounts of the assets may not be recoverable. For assessment purposes, long-lived assets are grouped with other assets and liabilities at the lowest identifiable level for which we generate cash flows independently of other groups of assets and liabilities. An impairment loss is recognized only if the carrying amount of the asset group is not recoverable and exceeds its estimated fair value. Recoverability of the asset group to be held and used is assessed by comparing the carrying amount of the asset group to the estimated undiscounted future net cash flows expected to be generated by the asset group. If the asset group's carrying value is not recoverable, we recognize an impairment charge for the amount by which the carrying amount of the asset group exceeds its estimated fair value.

~~Local~~Asset ~~currencies~~Retirement of our foreign subsidiaries are the functional currencies for financial reporting purposes except for certain foreign subsidiaries, primarily in Latin America prior to the August 1, 2022 sale of our Latin American business. For operations outside the United States that have functional currencies other than the U.S. dollar, assets and liabilities are translated to U.S. dollars at period-end exchange rates, and revenue, expenses and cash flows are translated using average monthly exchange rates. Prior to the November 1, 2023 sale of our EMEA business and the August 1, 2022 sale of our Latin American business, a significant portion of our non-United States subsidiaries used the British pound, the Euro or the Brazilian Real, as their functional currency, each of which experienced significant fluctuations against the U.S. dollar during the periods covered by this report when we operated the divested businesses. We recognize foreign currency translation gains and losses as a component of accumulated other comprehensive loss in member's equity in our consolidated balance sheet and in our consolidated statements of comprehensive (loss) income in accordance with accounting guidance for foreign currency translation. Prior to the completion of our divestitures as discussed in Note 2—Divestitures of the Latin American and EMEA Businesses, we considered the majority of our investments in our foreign subsidiaries to be long-term in nature. Our foreign currency transaction gains (losses), including where transactions with our non-United States subsidiaries are not considered to be long-term in nature, are included within Other income, net on our consolidated statements of operations.Obligations

~~Change~~We recognize asset retirement obligations (“ARO”s) for the legally or contractually required removal of certain property, plant, and equipment from leased properties, as well as for the disposal of hazardous materials in ~~Accounting~~owned ~~Estimate~~facilities. When an ARO is identified — typically at the time an asset is acquired — we record the fair value of the obligation as a liability and capitalize a corresponding amount as part of the asset’s cost. Our fair value estimates were determined using the discounted cash flow method. In subsequent periods, we increase the ARO liability for the passage of time (accretion expense) and adjust the liability and related asset for changes in the timing or amount of expected future cash flows. The capitalized amount is then amortized over the asset’s estimated remaining useful life. If a removal obligation is not legally binding, we expense the related removal costs as incurred, rather than capitalizing them.

~~During~~Goodwill ~~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~~Intangible 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 $27 million, $20 million net of tax, for the year ended December 31, 2024.Assets

Intangible assets acquired in business combinations — including goodwill, customer relationships, capitalized software, trademarks, and trade names — are recorded at estimated fair value at the acquisition date. Other intangible assets not arising from business combinations are initially recorded at cost.

We are required to reassign goodwill to reporting units whenever reorganizations of our internal reporting structure change the composition of our reporting units. Goodwill is reassigned to the reporting units using a relative fair value approach. When the fair value of a reporting unit is available, we allocate goodwill based on the relative fair value of the reporting units. When fair value is not available, we utilize an alternative allocation methodology that we believe represents a reasonable approximation of the fair value of the operations being reorganized.

Amortization

Intangible assets without legal, regulatory, contractual, or other limiting factors are classified as indefinite-lived and are not amortized. For finite-lived intangible assets, we amortize using the straight-line method over the following estimated lives:

•Customer relationships: 7 - 14 years, depending on customer type

•Capitalized software: 3 - 7 years

Internal Use Software

Internally used software, whether purchased or developed by us, is capitalized and amortized using the straight-line method over its estimated useful life. We capitalized costs of employees devoted to software development and external direct costs for materials and services. Costs are expensed until the project reaches the development stage. Subsequent additions, modifications, or upgrades are capitalized only if they add new functionality. Software maintenance, data conversion, and training costs are expensed as incurred. We review the remaining economic lives of our capitalized software annually. Capitalized software is included in other intangible assets, net, in our consolidated balance sheets.

Impairment Testing

Finite-lived intangible assets are evaluated for impairment when triggering events or changes in circumstances occur. If fair value is less than the carrying amount, we record an impairment charge for the difference.

Our goodwill was derived from Lumen's 2017 acquisition of us where the purchase price exceeded the fair value of the net assets acquired. Prior to becoming fully impaired in the second quarter of 2023, we tested goodwill for impairment annually as of October 31, or more frequently if events suggested a reporting unit’s fair value may fall below its carrying value. If the carrying value of a reporting unit exceeds its fair value of equity, we write-down goodwill. The impairment assessment was performed at the reporting unit level. We have determined that our operations consist of one reporting unit, consistent with our determination that our business consists of one operating segment. We were required to write-down the value of goodwill in periods in which the carrying amount of our reporting unit's equity exceeded the estimated fair value of the equity of the reporting unit, limited to the goodwill balance.

Second Quarter 2023 Goodwill Impairment Analysis

During the second quarter of 2023, the Company determined circumstances existed indicating it was more likely than not that the carrying value of our reporting unit exceeded its fair value. Given the continued erosion in Lumen's market capitalization, we determined our quantitative impairment analysis would estimate the fair value of our reporting unit 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. The revenue and EBITDA multiples were below these comparable market multiples. For the three months ended June 30, 2023, based on our assessment performed as described above, we concluded the estimated fair value was less than our carrying value of equity. As a result, our goodwill became fully impaired and we recorded a non-cash, non-tax-deductible goodwill impairment charge of $2.0 billion for the three months ended June 30, 2023.

The market approach that we used in the quarter ended June 30, 2023 test 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 regarding the size of our impairments. Subsequent to this impairment and as of December 31, 2025, we held no remaining goodwill.

For more information on our intangible assets, see Note 3 — Intangible Assets.

Foreign Currency

Local currencies of our foreign subsidiaries are the functional currencies for financial reporting purposes except for certain foreign subsidiaries. For operations with functional currencies other than the U.S. dollar, assets and liabilities are translated at period-end exchange rates, while revenue, expenses and cash flows use average monthly rates. Foreign currency translation gains and losses are recorded in our consolidated statements of comprehensive (loss) income.

Before the November 1, 2023 sale of our EMEA business, many of our non-United States subsidiaries used the British pound or Euro as their functional currency, both of which fluctuated significantly against the U.S. dollar during the periods covered in this report when we operated the divested business. Prior to the divestiture, most investments in foreign subsidiaries were considered long-term. Foreign currency transaction gains and losses, including those not deemed long-term, are reported in other income (expense), net on our consolidated statements of operations.

For additional details on the sale of our EMEA business, see Note 2 — Divestiture.

Recently Adopted Accounting Pronouncements

Segments

On January 1, 2024 we adopted Accounting Standards Update ("ASU") 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures.” This ASU is intended to improve reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. The ASU does not change how a public entity identifies its operating segments, aggregates them or applies quantitative thresholds to determine reportable segments. Public entities with a single reportable segment are required to provide the new disclosures and all the disclosures required under ASC 280, "Segment Reporting." ~~We did not early adopt this standard.~~ The adoption of this ASU did not have a material impact on our consolidated financial statements.

Investments

On January 1, 2024, we adopted ASU 2023-02, “Investments-Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method.” This ASU allows reporting entities to elect to account for qualifying tax equity investments using the proportional amortization method, regardless of the program giving rise to the related income tax credits. The adoption of this ASU did not have any impact on our consolidated financial statements.

On January 1, 2024, we adopted ASU 2022-03, “Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions.” This ASU clarifies that a contractual restriction on the sales of an investment in an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring its fair value. The adoption of this ASU did not have any impact on our consolidated financial statements.

Leases

On January 1, 2024, we adopted ASU 2023-01, “Leases (Topic 842): Common Control Arrangements.” This ASU requires all entities to amortize leasehold improvements associated with common control leases over the useful life to the common control group. The adoption of this ASU did not have any impact on our consolidated financial statements.

OnIncome January 1, 2022, we adopted ASU 2021-05, “Leases (Topic 842): Lessors—Certain Leases with Variable Lease Payments.” This ASU (i) amends the lease classification requirements for lessors, (ii) provides criteria for lessors to classify and account for a lease with variable lease payments that do not depend on a reference index or a rate as an operating lease; and (iii) provides guidance with respect to net investments by lessors under operating leases and other related topics. The adoption of this ASU did not have a material impact on our consolidated financial statements.Taxes

~~Reference~~In ~~Rate~~December ~~Reform~~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) 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 became effective for us in the annual period of fiscal 2025. Refer to Note 13 — Income Taxes for more information.

In December 2022, the Financial Accounting Standards Board (“FASB”) issued ASU 2022-06, “Reference Rate Reform (Topic 848) – Deferral of the Sunset Date of Topic 848." This ASU, which was effective upon issuance, extends the period of time preparers can utilize the reference rate reform relief guidance in Topic 848, by deferring the sunset date from December 31, 2022, to December 31, 2024, after which entities will no longer be permitted to apply the relief in Topic 848. Based on our review of our key material contracts through December 31, 2024, this ASU does not have a material impact on our consolidated financial statements.61

Supplier Finance Programs

On January 1, 2023, we adopted ASU 2022-04, “Liabilities-Supplier Finance Program (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations.” This ASU requires ~~that~~ a company that uses a supplier finance program in connection with the purchase of goods or services to disclose sufficient information about the program to allow a user of financial statements to understand the program’s nature, program activity during the period, changes from period to period and the potential magnitude of program transactions. The adoption of this ASU did not have a material 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.” 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 this ASU did not have a material impact on our consolidated financial statements.

Adoption of Other ASUs

In July 2023, the FASB issued ASU 2023-03, “Presentation of Financial Statements (Topic 205), Income Statement—Reporting Comprehensive Income (Topic 220), Distinguishing Liabilities from Equity (Topic 480), Equity (Topic 505), and Compensation—Stock Compensation (Topic 718): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 120, SEC Staff Announcement at the March 24, 2022 EITF Meeting, and Staff Accounting Bulletin Topic 6.B, Accounting Series Release 280—General Revision of Regulation S-X: Income or Loss Applicable to Common Stock.” This ASU became effective for us once the addition to the FASB Codification was made available in July 2023. This ASU amends or supersedes various SEC paragraphs within the applicable codification to conform to past SEC staff announcements. This ASU does not provide any new guidance. The adoption of this ASU did not have any impact on our consolidated financial statements.

Recently Issued Accounting Pronouncements

In ~~November~~December ~~2024~~2025, the Financial Accounting Standards Board ("FASB") issued ASU ~~2024~~2025-~~04,~~12 ~~"Debt—Debt~~“Codification ~~with~~Improvements.” ~~Conversion~~The ~~and~~ASU ~~Other~~represents ~~Options~~changes ~~(Subtopic~~to ~~470-20):~~the ~~Induced~~Codification ~~Conversions~~that ofclarify, ~~Convertible~~correct ~~Debt~~errors, ~~Instruments~~or make minor improvements." ~~This~~The ~~ASU~~amendments ~~clarifies~~make the ~~requirements~~Codification ~~for~~easier ~~determining~~to ~~whether~~understand ~~certain~~and ~~settlements~~apply. ofThe ~~convertible~~amendments ~~debt~~in ~~instruments~~ASU ~~should~~2025-12 beare ~~accounted~~effective for asfiscal ~~induced~~years ~~conversions~~beginning ~~rather~~after ~~than~~December as15, ~~debt~~2026, ~~extinguishments.~~including ~~This~~interim ~~standard~~periods iswithin ~~effective~~those fiscal years, with early adoption permitted. Except for the ~~annual~~amendments ~~period~~to ofTopic ~~fiscal 2026~~260, ~~and~~"Earnings ~~early~~Per ~~adoption~~Share" isthis ~~permitted.~~ASU Ascan ofbe ~~December~~applied ~~31,~~either ~~2024,~~prospectively weor doretrospectively ~~not~~with ~~hold~~transition ~~convertible~~method ~~debt~~elected ~~instruments~~on ~~and~~an doissue-by-issue ~~not~~basis. ~~expect~~The ~~this~~Company is currently evaluating ASU ~~will~~2025-12 ~~have~~to ~~any~~determine the impact it may have on our consolidated financial statements.

In ~~November~~December ~~2024~~2025, the FASB issued ASU ~~2024~~2025-0311, "~~Disaggregation~~Interim ofReporting ~~Income~~(Topic ~~Statement~~270): ~~Expenses~~Narrow-Scope Improvements." This ASU ~~requires~~clarifies ~~additional~~that ~~footnote~~the interim reporting requirements in Topic 270 apply to all entities that issue interim financial statements prepared in accordance with U.S. GAAP and consolidates such requirements within Topic 270. The amendments provide a comprehensive list within Topic 270 of required interim disclosures, establish a principle requiring disclosure of events or changes occurring after the ~~details~~end of ~~certain~~the ~~income~~most ~~statement~~recent ~~expense~~annual ~~line~~reporting ~~items~~period asthat ~~well~~have ~~as,~~a ~~additional~~material ~~disclosure~~impact ~~about~~on ~~selling~~interim ~~expenses~~results and clarifies the form and content requirements applicable to interim financial statements. ~~This~~The ~~standard~~amendments isin ASU 2025-11 are effective for the interim reporting periods within annual ~~period~~reporting ofperiods ~~fiscal~~beginning after December 15, 2027, ~~and~~with early adoption is permitted. ~~The~~This ~~guidance~~ASU iscan to be applied either prospectively, ~~with~~or ~~the~~retrospectively ~~option~~to ~~for~~any ~~retrospective~~or ~~application~~all prior periods presented in the financial statements. WeThe ~~are~~Company is currently evaluating ~~the~~ASU ~~impact~~2025-11 ~~the~~to ~~adoption~~determine ofthe ~~this~~impact ~~standard~~it ~~will~~may have on our ~~disclosures~~consolidated financial statements.

In December ~~2023~~2025, the FASB issued ASU ~~2023~~2025-0910, ~~“Income~~"Government ~~Taxes~~Grants (Topic ~~740~~832): ~~Improvements~~Accounting tofor ~~Income~~Government ~~Tax~~Grants ~~Disclosures~~Received by Business Entities.”" This ASU ~~requires~~establishes ~~that~~authoritative ~~public~~guidance ~~business~~on ~~entities must annually (1) disclose specific categories in~~ the ~~rate~~accounting ~~reconciliation and (2) provide additional information~~ for ~~reconciling~~government ~~items~~grants ~~that~~received ~~meet~~by abusiness ~~quantitative~~entities. ~~threshold~~The ~~(if~~amendments ~~the~~in ~~effect~~ASU of2025-10 ~~those~~are ~~reconciling~~effective ~~items~~for isannual ~~equal~~reporting toperiods orbeginning ~~greater~~after ~~than~~December 515, ~~percent~~2028, ofand ~~the~~interim ~~amount~~reporting ~~computed~~periods bywithin ~~multiplying~~those ~~pretax~~annual ~~income~~reporting orperiods, ~~loss~~with byearly ~~the~~adoption ~~applicable statutory income tax rate)~~permitted.” This ASU ~~will~~can ~~become~~be ~~effective~~applied ~~for~~using usa inmodified ~~the~~prospective ~~annual~~approach, ~~period~~a ofmodified ~~fiscal~~retrospective ~~2025~~approach, ~~and~~or ~~early~~a ~~adoption~~retrospective ~~is permitted~~approach. WeThe ~~have~~Company ~~chosen~~is ~~not~~currently toevaluating ~~early~~ASU ~~adopt~~2025-10 ~~this~~to ~~ASU~~determine ~~and~~the ~~are~~impact ~~currently~~it ~~evaluating~~may ~~its~~have ~~impact~~ on our consolidated financial statements~~, including our annual disclosure within our Income Taxes footnote~~.

In ~~December~~November ~~2023~~2025, the FASB issued ASU ~~2023~~2025-0809, ~~“Intangibles—Goodwill~~"Derivatives and ~~Other—Crypto~~Hedging ~~Assets~~ (~~Subtopic~~Topic ~~350-60~~815): Hedge Accounting ~~for and Disclosure of Crypto Assets~~Improvements.”" This ASU isintroduces ~~intended~~five totargeted ~~improve~~improvements ~~the accounting for certain crypto assets by requiring an entity~~ to ~~measure~~better ~~those~~align ~~crypto~~hedge ~~assets~~accounting ~~at fair value each reporting period~~ with ~~changes~~entities’ inrisk ~~fair~~management ~~value recognized in net income~~activities. The amendments ~~also~~in ~~improve~~ASU ~~the~~2025-09 ~~information~~are ~~provided~~effective tofor ~~investors~~annual ~~about~~reporting anperiods ~~entity’s~~beginning ~~crypto~~after ~~asset~~December ~~holdings~~15, by2026, ~~requiring~~and ~~disclosure~~interim ~~about~~periods ~~significant~~within ~~holdings,~~those ~~contractual~~annual ~~sale~~reporting ~~restrictions~~periods, ~~and~~with ~~changes~~early ~~during~~adoption ~~the~~permitted ~~reporting~~and ~~period.~~should ~~This~~be ~~ASU~~applied ~~will~~on ~~become~~a ~~effective~~prospective basis for usall inhedging ~~the~~relationships. ~~first~~The ~~quarter~~Company ofintends ~~fiscal~~to ~~2025 and~~ early ~~adoption~~adopt isASU ~~permitted.~~2025-09 Asprospectively, ofeffective ~~December~~January 311, ~~2024,~~2026. weThe doadoption ~~not~~is ~~hold crypto assets and do~~ not ~~expect~~expected ~~this ASU~~ to have ~~any~~an impact on our consolidated financial statements.

6162

In ~~October~~November ~~2023~~2025, the FASB issued ASU ~~2023~~2025-0608, ~~“Disclosure~~"Financial ~~Improvements~~Instruments — Credit Losses (Topic 326): ~~Codification~~Purchased ~~Amendments~~Loans." inThis ~~Response~~ASU torequires ~~the~~that ~~SEC’s~~loans ~~Disclosure~~acquired ~~Update~~without credit deterioration and ~~Simplification~~deemed ~~Initiative.~~“seasoned” ~~This~~will ~~ASU~~be ~~incorporates~~considered ~~certain~~purchased ~~SEC~~seasoned ~~disclosure~~loans ~~requirements~~and ~~into~~accounted for using the ~~FASB~~gross-up ~~Codification.~~approach ~~The~~at ~~amendments~~acquisition in(i.e., record the ~~ASU~~loan ~~are~~at its purchase price and separately record an allowance for expected tocredit ~~clarify~~losses). orSeasoned ~~improve~~loans ~~disclosure~~include ~~and~~all ~~presentation~~loans ~~requirements~~acquired ofin a ~~variety~~business combination, that do not have “more-than-insignificant” deterioration of ~~FASB~~credit ~~Codification~~quality ~~topics~~since origination, ~~allow~~as ~~users~~well toas ~~more~~loans ~~easily~~purchased ~~compare~~at ~~entities~~least ~~subject~~90 todays after origination, where the ~~SEC’s~~purchaser ~~existing~~was ~~disclosures~~not ~~with~~involved ~~those~~in ~~entities~~the ~~that~~origination ~~were~~of ~~not~~the ~~previously~~loans. ~~subject~~The toamendments ~~the~~in ~~requirements~~ASU 2025-08 are effective for annual reporting periods beginning after December 15, 2026, and ~~align~~interim ~~the~~reporting ~~requirements~~periods inwithin ~~the~~those ~~FASB~~annual ~~Codification~~reporting periods, with ~~the~~early ~~SEC’s~~adoption ~~regulations~~permitted. This ASU ~~will~~should ~~become~~be ~~effective~~applied ~~for~~prospectively ~~each~~to ~~amendment~~loans that are acquired on or after the ~~effective~~initial application date. ofThe ~~the~~Company ~~SEC's~~intends ~~corresponding~~to ~~disclosure~~early ~~rule~~adopt ~~changes.~~ASU As2025-08 ofprospectively, ~~December~~effective ~~31,~~January ~~2024~~1, we2026. doThe ~~not~~adoption ~~expect~~is ~~this~~not ~~ASU~~expected ~~will~~to have ~~any~~an impact on our consolidated financial statements.

In ~~August~~September ~~2023~~2025, the FASB issued ASU ~~2023~~2025-0507, ~~“Business~~"Derivatives ~~Combinations~~and –Hedging ~~Joint~~(Topic ~~Venture~~815)" ~~Formations~~and "Revenue from Contracts with Customers (~~Subtopic~~Topic ~~805-60~~606):." ~~Recognition~~The ~~and~~guidance ~~Initial~~refines ~~Measurement.”~~the ~~This~~scope ~~ASU~~of ~~applies~~Topic 815 to ~~the~~clarify ~~formation~~which ofcontracts ~~entities~~are ~~that~~subject ~~meet~~to ~~the~~derivative ~~definition~~accounting. ofThis aASU ~~joint~~also ~~venture~~provides ~~(or~~clarification under Topic 606 for share-based payments from a ~~corporate~~customer ~~joint~~in ~~venture)~~a revenue contract. The amendments in ~~the~~ ASU ~~require~~2025-07 ~~that~~are aeffective ~~joint~~for ~~venture~~fiscal ~~apply~~years abeginning ~~new~~after ~~basis~~December of15, ~~accounting~~2026, ~~upon~~and ~~formation~~interim reporting periods, with early adoption permitted. This ASU ~~will~~is ~~become~~permitted ~~effective~~to ~~for~~be usapplied ineither ~~the~~prospectively ~~first~~to ~~quarter~~new ofcontracts ~~fiscal~~entered ~~2025~~into ~~and~~on ~~early~~or after the date of adoption isor ~~permitted.~~on Asa modified retrospective basis through a cumulative-effect adjustment to the opening balance of ~~December~~retained 31earnings. The Company intends to early adopt ASU 2025-07 prospectively, ~~2024~~effective January 1, we2026. doThe ~~not~~adoption ~~expect~~is ~~this~~not ~~ASU~~expected ~~will~~to have ~~any~~an impact on our consolidated financial statements.

~~Note~~In 2September 2025, the FASB issued ASU 2025-06, "Intangibles —~~Divestitures~~ ofGoodwill and Other — Internal-Use Software (Subtopic 350-40): Targeted Improvements to the ~~Latin~~Accounting ~~American~~for Internal-Use Software" which amends the guidance in ASC 350-40, "Intangibles — Goodwill and ~~EMEA~~Other ~~Businesses~~— Internal-Use Software." This ASU modernizes the recognition and disclosure framework for internal-use software costs, removing the previous “development stage” model and introducing a more judgment-based approach. The amendments in ASU 2025-06 are effective for fiscal years beginning after December 15, 2027, and for interim periods within those annual reporting periods, with early adoption permitted. This ASU is permitted to be applied prospectively, retrospectively or through a modified transition approach. The Company intends to early adopt ASU 2025-06 prospectively, effective January 1, 2026. The adoption is not expected to have an impact on our consolidated financial statements.

~~Latin~~In ~~American~~July ~~Business~~2025, the FASB issued ASU 2025-05 "Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets." This ASU provides entities with a practical expedient to simplify the estimation of expected credit losses on current accounts receivable and current contract assets that arise from transactions accounted for under ASC 606 by allowing the assumption that current conditions as of the balance sheet date will not change during the remaining life of the asset. The amendments in ASU 2025-05 are effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods, with early prospective adoption permitted. The Company is currently evaluating ASU 2025-05 to determine the impact it may have on our consolidated financial statements.

OnIn ~~August 1,~~May ~~2022~~2025, ~~affiliates~~the FASB issued ASU 2025-03 "Business Combinations (Topic 805) and Consolidation (Topic 810): Determining the Accounting Acquirer in the Acquisition of ~~Level~~a 3Variable ~~Parent,~~Interest ~~LLC~~Entity." ~~sold~~This ~~its~~ASU ~~Latin~~revises ~~American~~current guidance for determining the accounting acquirer for a transaction effected primarily by exchanging equity interests in which the legal acquiree is a variable interest entity that meets the definition of a business. ~~pursuant~~The amendments require an entity to aconsider ~~definitive~~the ~~agreement~~same ~~dated~~factors ~~July 25,~~that ~~2021~~are currently required for ~~pre~~determining which entity is the accounting acquirer in other acquisition transactions. The amendments in ASU 2025-~~tax~~03 ~~cash~~are ~~proceeds~~effective offor ~~approximately~~annual $2reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods, with early prospective adoption permitted.~~7 billion~~ The Company intends to early adopt ASU 2025-03 prospectively, effective January 1, 2026. The adoption is not expected to have an impact on our consolidated financial statements.

~~For~~In November 2024, the ~~year~~FASB ~~ended~~issued ~~December~~ASU 312024-04, ~~2022,~~"Debt we— ~~recorded~~Debt awith ~~$123 million~~Conversion ~~net~~and ~~pre~~Other Options (Subtopic 470-~~tax~~20): ~~gain~~Induced onConversions ~~disposal~~of ~~associated~~Convertible ~~with~~Debt Instruments." This ASU clarifies the ~~sale~~requirements for determining whether certain settlements of ~~our~~convertible ~~Latin~~debt ~~American~~instruments ~~business~~should be accounted for as induced conversions rather than as debt extinguishments. The amendments in ASU 2024-04 are effective for the annual period of fiscal 2026, and early adoption is permitted. This ~~gain~~ASU is ~~reflected~~permitted asto ~~operating~~be ~~income~~applied ~~within~~on ~~the~~either ~~consolidated~~a ~~statements~~prospective or retrospective basis. As of ~~operations~~December 31, 2025, we do not hold convertible debt instruments and do not expect this ASU will have any impact on our consolidated financial statements.

In connection with the sale, Lumen entered into a transition services agreement under which it provides to the purchaser various support services. In addition, Lumen and the purchaser entered into commercial agreements whereby they provide each other various network and other commercial services. Lumen also agreed to indemnify the purchaser for certain matters for which future cash payments by Lumen could be required. Lumen estimated the fair value of these indemnifications to be $86 million and reduced our gain on the sale accordingly. See Note 12—Fair Value of Financial Instruments for detail related to the carrying value and fair value of these indemnifications as of December 31, 2024 and 2023.63

~~The~~In ~~Latin~~November ~~American~~2024, ~~business~~the ~~was~~FASB ~~included~~issued inASU ~~our~~2024-03, ~~continuing~~"Disaggregation ~~operations~~of ~~and~~Income ~~classified~~Statement asExpenses." ~~assets~~This ~~and~~ASU ~~liabilities~~requires ~~held~~additional ~~for~~footnote ~~sale~~disclosure onof ~~our~~the ~~consolidated~~details ~~balance~~of ~~sheets~~certain ~~through~~income ~~the~~statement ~~closing~~expense ofline ~~the~~items ~~transaction~~as onwell ~~August 1,~~as ~~2022.~~additional Asdisclosure aabout ~~result~~selling ofexpenses. ~~closing~~The ~~the~~amendments ~~transaction,~~in weASU ~~derecognized~~2024-03 ~~$2.4 billion~~are ofeffective ~~net~~for ~~assets,~~the ~~primarily~~annual ~~made~~period up of ~~(i)~~fiscal ~~property~~2027, ~~plant~~ and ~~equipment,~~early ~~net~~adoption ofis ~~accumulated~~permitted. ~~depreciation,~~The ofguidance ~~$1.7 billion,~~is ~~(ii)~~to ~~goodwill~~be ofapplied ~~$719 million~~prospectively, ~~(iii)~~with ~~other~~the ~~intangible~~option ~~assets,~~for ~~net~~retrospective ofapplication. ~~accumulated~~The ~~amortization,~~Company ofis ~~$140 million,~~currently ~~and~~evaluating ~~(iv)~~ASU ~~deferred~~2024-03 ~~income~~and ~~tax~~the ~~liabilities,~~impact ~~net,~~the adoption of ~~$154 million.~~this standard will have on our disclosures.

Note 2 — Divestiture

EMEA Business

On November 1, 2023, affiliates of Level 3 Parent, LLC completed the sale of its operations in EMEA business to Colt Technology Services Group Limited, a portfolio company of Fidelity Investments, for pre-tax cash proceeds of $1.7 billion after certain closing adjustments and transaction costs. This consideration is further subject to other post-closing adjustments and indemnities set forth in the Purchase Agreement, as amended and supplemented to date. In connection with the sale, we entered into a transition services agreement under which we provide the purchaser various support services. In addition, Lumen and the purchaser entered into commercial agreements whereby they provide each other various network and other commercial services.

62The classification of the EMEA business as held for sale was considered an event or change in circumstance which required an assessment of the goodwill of the disposal group for impairment each reporting period until disposal. We performed a pre-classification and post-classification goodwill impairment test of the disposal group as described further in Note 3 — Intangible Assets. As a result of our impairment tests, we determined the EMEA business disposal group was impaired resulting in a non-cash, non-tax-deductible goodwill impairment charge of $224 million in the fourth quarter of 2022. As a result of our evaluation of the recoverability of the carrying value of the assets and liabilities held for sale relative to the agreed upon sales price, adjusted for costs to sell, we recorded an estimated loss on disposal of $616 million during the year ended December 31, 2022 in the consolidated statement of operations and a valuation allowance included in assets held for sale on the consolidated balance sheet as of December 31, 2022. For the year ended December 31, 2023, we recorded a $104 million net loss on disposal associated with the sale of our EMEA business. This loss is reflected as operating expense within the consolidated statements of operations.

The classification of the EMEA business as held for sale was considered an event or change in circumstance which required an assessment of the goodwill of the disposal group for impairment each reporting period until disposal. We performed a pre-classification and post-classification goodwill impairment test of the disposal group as described further in Note 3—Goodwill, Customer Relationships and Other Intangible Assets. As a result of our impairment tests, we determined the EMEA business disposal group was impaired resulting in a non-cash, non-tax-deductible goodwill impairment charge of $224 million in the fourth quarter of 2022. As a result of our evaluation of the recoverability of the carrying value of the assets and liabilities held for sale relative to the agreed upon sales price, adjusted for costs to sell, we recorded an estimated loss on disposal of $616 million during the year ended December 31, 2022 in the consolidated statement of operations and a valuation allowance included in assets held for sale on the consolidated balance sheet as of December 31, 2022. For the year ended December 31, 2023, we recorded a $104 million net loss on disposal associated with the sale of our EMEA business. This loss is reflected as operating expense within the consolidated statements of operations.64

The EMEA business was included in our continuing operations and classified as assets and liabilities held for sale on our consolidated balance sheets through the closing of the transaction on November 1, 2023. As a result of closing the transaction, we derecognized $1.4 billion of net assets, the principal components of which were as follows:


	November 1, 2023
	EMEA Business
	(Dollars in millions)
Assets held for sale
Cash and cash equivalents	$	12
Accounts receivable, less allowance of $4	70
Other current assets	59
Property, plant and equipment, net accumulated depreciation of $1,019	1,957
Customer relationships and other intangible assets, net	107
Operating lease assets	208
Valuation allowance on assets held for sale(1)	(720)
Deferred tax assets	144
Other non-current assets	37
Total assets held for sale	$	1,874
Liabilities held for sale
Accounts payable	$	69
Salaries and benefits	20
Current portion of deferred revenue	25
Current operating lease liabilities	42
Other current liabilities	30
Deferred income taxes	60
Asset retirement obligations	32
Deferred revenue, non-current	102
Operating lease liabilities, non-current	93
Total liabilities held for sale	$	473

______________________________________________________________________

(1) Includes the impact of $350 million realized loss on foreign currency translation, net of tax, reclassified out of accumulated other comprehensive loss as of December 31, 2023 to the valuation allowance and loss on sale of the EMEA business.

We do not believe ~~these~~this divestiture ~~transactions~~transaction ~~represent~~represents a strategic shift for us. Therefore, the divested ~~businesses~~business discussed above did not meet the criteria to be classified as discontinued operations. As a result, we continued to report our operating results for the ~~Latin American and~~ EMEA ~~businesses~~business in our consolidated operating results through ~~their~~its respective disposal ~~dates~~date ~~of August 1, 2022 and~~ November 1, 2023~~, respectively~~.

Note 3—Goodwill, Customer Relationships and Other Intangible Assets

Customer relationships and other intangible assets consisted of the following:

	As of December 31,
	2024		2023
	(Dollars in millions)
Customer relationships(1), less accumulated amortization of $4,504 and $3,896	$	3,196	3,810
Capitalized software, less accumulated amortization of $451 and $419	373		427
Total other intangible assets, net	$	3,569	4,237

______________________________________________________________________

(1)For the year ended December 31, 2023, customer relationships decreased $121 million in conjunction with the sale of select CDN contracts in the fourth quarter of 2023 that resulted in a net loss of $73 million included in selling, general and administrative expenses in our consolidated statement of operations.

As of December 31, 2024 and 2023, the gross carrying amount of customer relationships and capitalized software was $8.5 billion and $8.6 billion, respectively.

Our goodwill was derived from Lumen's 2017 acquisition of us where the purchase price exceeded the fair value of the net assets acquired. Prior to becoming fully impaired in the second quarter of 2023, we were 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 were 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 was October 31, at which date we assessed goodwill at our reporting unit. In reviewing the criteria for reporting units, we determined that our operations consisted of one reporting unit.

Second Quarter 2023 Goodwill Impairment Analysis

2022 Goodwill Impairment Analyses

As of October 31, 2022, we estimated the fair value of equity of our reporting unit by considering both a market approach and a discounted cash flow method. We discounted the projected cash flows using a rate that represented weighted average cost of capital of 9.4% as of the assessment date, which comprised an after-tax cost of debt of 4.8% and a cost of equity of 14.0%. We utilized company comparisons and analyst reports within the telecommunications industry which at the time of assessment supported a range of fair values derived from annualized revenue and EBITDA multiples between 1.8x and 4.6x and 4.7x and 10.8x, respectively, resulting in an overall company revenue and EBITDA multiple of 2.5x and 7.1x, respectively. The market approach method includes the use of comparable multiples of publicly traded companies whose services are comparable to ours. The discounted cash flow method is based on the present value of projected cash flows and a terminal value equal to the present value of all normalized cash flows after the projection period. As of October 31, 2022, based on our assessment performed, the carrying value of our equity exceeded our fair value of equity and as a result, we recorded a non-cash, non-tax-deductible goodwill impairment charge of approximately $4.4 billion at October 31, 2022.

The classification of the EMEA business as being held for sale as described in Note 2—Divestitures of the Latin American and EMEA Businesses, was considered an event or change in circumstance which required an assessment of our goodwill for impairment as of October 31, 2022. We performed a pre-announcement goodwill impairment test described above to determine whether there was an impairment prior to the classification of these assets as held for sale and to determine the November 2, 2022 fair values to be utilized for goodwill allocation regarding the disposal group to be classified as assets held for sale. We also performed a post-announcement goodwill impairment test using our estimated post-divestiture cash flows and carrying value of equity to evaluate whether the fair value that will remain following the divestiture exceeds the carrying value of the equity after classification of assets held for sale. We concluded no impairment existed following the divestiture.

Separate from the annual, pre-announcement and post-announcement goodwill assessments discussed above, we performed an assessment of our EMEA business disposal group for impairment using the purchase price compared to the carrying value of the EMEA business net assets. As a result, we concluded the EMEA business disposal group was impaired, resulting in a non-cash, non-tax-deductible goodwill impairment charge of $224 million. See Note 2—Divestitures of the Latin American and EMEA Businesses for additional information regarding the purchase price, carrying value, and impairment for goodwill of the EMEA business.

The following table shows the rollforward of goodwill from December 31, 2022 through December 31, 2023:

	(Dollars in millions)
As of December 31, 2022(1)	$	1,970
Impairment	(1,970)
As of December 31, 2023	—
As of December 31, 2024	$	—

_______________________________________________________________________________

(1)Goodwill at December 31, 2022 is net of accumulated impairment loss of $8.2 billion.

Total amortization expense for finite-lived intangible assets for the years ended December 31, 2024, 2023 and 2022 was $729 million, $714 million and $744 million, respectively. As of December 31, 2024, the weighted average remaining useful lives of our finite-lived intangible assets was approximately six years in total; six years for customer relationships, and four years for capitalized software.

Note 3 — Intangible Assets

Intangible assets consisted of the following:


	December 31,
	2025		2024
	(Dollars in millions)
Customer relationships, less accumulated amortization of $4,945 and $4,504	$	2,602	3,196
Capitalized software, less accumulated amortization of $512 and $451	341		373
Total intangible assets, net	$	2,943	3,569

As of December 31, 2025 and 2024, the gross carrying amount of customer relationships and capitalized software was $8.4 billion and $8.5 billion, respectively, and the weighted average remaining useful lives of our finite-lived intangible assets were approximately:

•Customer relationships: 5 years;

•Capitalized software: 4 years; and

•Total intangible assets: 5 years.

Amortization Expense

Total amortization expense for finite-lived intangible assets for the years ended December 31, 2025, 2024 and 2023 was $683 million, $729 million and $714 million, respectively.

We estimate that future total amortization expense for finite-lived intangible assets will be as follows:

	(Dollars in millions)
2025	$	654
2026	$	645
2026	642
2027	603
2027	600
2028	562
2028	558
2029	372
2029	368
2030	366
2030 and thereafter	747
2031 and thereafter	395
Total finite-lived intangible assets future amortization expense	$	32,~~569~~943

Note 4 — Revenue Recognition

WeProduct ~~categorize our products~~ and ~~services~~Service ~~revenue among the following categories:~~Categories

~~•Grow,~~As ~~which~~of ~~includes~~December ~~existing~~31, ~~and~~2025, ~~emerging products and services in which~~ we ~~are~~categorize ~~significantly investing, including~~ our ~~colocation,~~products ~~dark fiber~~ and ~~conduit,~~services ~~Edge~~revenue ~~Cloud,~~among ~~IP,~~the ~~managed~~following ~~security, software-defined wide area networks ("SD WAN"), Unified Communications and Collaboration ("UC&C") and wavelengths services;~~categories:

•~~Nurture,~~Grow: ~~which~~Includes ~~includes~~existing ~~our~~and ~~more~~emerging ~~mature~~products ~~offerings~~and services in which we are significantly investing, including ~~ethernet~~our colocation, dark fiber and ~~VPN~~conduit, ~~data~~Edge Cloud, IP, managed security, software-defined wide area networks ("SD WAN"), Unified Communications and Collaboration ("UC&C"), and wavelengths services;

•~~Harvest,~~Nurture: ~~which~~Includes ~~includes~~ our ~~legacy~~more ~~services~~mature ~~managed for cash flow~~offerings, including ~~Time~~ethernet ~~Division Multiplexing voice,~~ and ~~private~~VPN ~~line~~data networks services;

•~~Other,~~Harvest: ~~which~~Includes ~~includes~~our ~~primarily~~legacy services managed ~~and~~for ~~professional~~cash ~~service solutions and content delivery network ("CDN") revenue~~flow, ~~prior~~including toTime ~~the~~Division ~~sale~~Multiplexing ofvoice ~~select~~and ~~CDN~~private ~~contracts~~line ~~in late 2023~~services; ~~and~~

•~~Affiliate~~Other: ~~Services,~~Includes ~~which~~primarily ~~includes~~managed ~~communications~~and ~~services~~professional ~~provided~~service tosolutions ~~our~~and ~~affiliates~~content ~~that~~delivery wenetwork ~~also~~("CDN") ~~provide~~revenue, prior to ~~our~~the ~~external~~sale ~~customers.~~of select CDN contracts in late 2023; and

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

•Affiliate Services: Includes communications services provided to our affiliates that we also provide to our external customers.

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

Reconciliation of Total Revenue to Revenue from Contracts with Customers

The following tables provide our total revenue by product and service category. They also provide 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. The amounts in the tables below include revenue for the ~~Latin American and~~ EMEA ~~businesses~~business prior to ~~their~~its ~~sales~~sale on ~~August 1, 2022 and~~ November 1, 2023~~, respectively~~:

Year Ended December 31, 2024

Year Ended December 31, 2025

Total Revenue

Adjustments for Non-ASC 606 Revenue (1)

Total Revenue from Contracts with Customers

(Dollars in millions)

Grow

34,~~837~~086

(~~603~~762)

3,~~234~~324

Nurture

1,~~523~~365

(1412)

1,~~509~~353

Harvest

~~756~~683

—

~~756~~683

Other

~~118~~131

—

~~118~~131

Affiliate Services

~~262~~278

(~~262~~278)

—

Total Revenue

6,~~496~~543

(~~879~~1,052)

5,~~617~~491

Timing of revenue:

Goods transferred at a point in time

209

Services performed over time

5,~~597~~482

Total revenue from contracts with customers

5,~~617~~491

Year Ended December 31, 2023

Year Ended December 31, 2024

Total Revenue

Adjustments for Non-ASC 606 Revenue (1)

Total Revenue from Contracts with Customers

(Dollars in millions)

Grow

3,~~898~~837

(~~595~~603)

3,~~303~~234

Nurture

1,~~699~~522

(1514)

1,~~684~~508

Harvest

~~972~~757

—

~~972~~757

Other

~~244~~118

—

~~244~~118

Affiliate Services

~~224~~262

(~~224~~262)

—

Total Revenue

76,~~037~~496

(~~834~~879)

65,~~203~~617

Timing of revenue:

Goods transferred at a point in time

—20

Services performed over time

65,~~203~~597

Total revenue from contracts with customers

65,~~203~~617

Year Ended December 31, 2022

Year Ended December 31, 2023

Total Revenue

Adjustments for Non-ASC 606 Revenue (1)

Total Revenue from Contracts with Customers

(Dollars in millions)

Grow

3,~~964~~898

(~~665~~595)

3,~~299~~303

Nurture

1,~~902~~691

(15)

1,~~887~~676

Harvest

~~1,139~~972

—

~~1,139~~972

Other

~~261~~252

—

~~261~~252

Affiliate Services

~~227~~224

(~~227~~224)

—

Total Revenue

7,~~493~~037

(~~907~~834)

6,~~586~~203

Timing of revenue:

Goods transferred at a point in time

4—

Services performed over time

6,~~582~~203

Total revenue from contracts with customers

6,~~586~~203

_______________________________________________________________

(1) Includes lease revenue which is not within the scope of ASC 606.

We do not have any single external customer that comprises more than 10% of our total consolidated operating revenue., ~~Substantially~~and substantially all of our consolidated revenue comes from customers located in the United States.

Customer Receivables and Contract Balances

The following table provides balances of customer receivables, contract assets and contract liabilities, net of amounts classified as held for sale:

	As of December 31,
	December 31,
	2024		2023
	2025		2024
	(Dollars in millions)
Customer receivables, less allowance of $12 and $13	$	529	544
Customer receivables, less allowance of $16 and $12	$	764	529
Contract assets	1213		812
Contract liabilities	~~267~~259		~~222~~267

Contract liabilities are consideration we have received from our customers or billed in advance of providing the goods or services promised in the future. We defer recognizing this consideration 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 years ended December 31, ~~2024~~2025 and ~~2023~~2024, we recognized $~~120~~150 million and $~~139~~120 million, respectively, of revenue that was included in contract liabilities of $~~222~~267 million and $~~281~~222 million as of January 1, ~~2024~~2025 and ~~2023~~2024, respectively, including contract liabilities that were classified as held for sale.

Performance Obligations

As of December 31, ~~2024~~2025, we expect to recognize approximately $4.2 billion of revenue in the future related to performance obligations associated with existing customer contracts that are partially or wholly unsatisfied. As of December 31, ~~2024~~2025, the transaction price related to unsatisfied performance obligation that are expected to be recognized in ~~2025~~2026, ~~2026~~2027, and thereafter was $2.01 billion, $1.2 billion, and $~~1.0~~950 ~~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.:

•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

•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:

	Year Ended December 31, 2024
	Year Ended December 31, 2025			Year Ended December 31, 2024
	Acquisition Costs		Fulfillment Costs	Acquisition Costs	Fulfillment Costs
	(Dollars in millions)			(Dollars in millions)
Beginning of period balance	$	7077	97127	70	97
Costs incurred	5549		~~103~~119	55	103
Amortization	(4850)		(7390)	(48)	(73)
End of period balance	$	7776	~~127~~156	77	127

	Year Ended December 31, 2023
	Acquisition Costs		Fulfillment Costs
	(Dollars in millions)
Beginning of period balance(1)	$	76	106
Costs incurred	55		87
Amortization	(57)		(69)
Classified as held for sale	(4)		(27)
End of period balance	$	70	97

_____________________________________________________________________

(1)Beginning of period balance for the year ended December 31, 2023 excludes $6 million of acquisition costs and no fulfillment costs classified as held for sale related to the EMEA business.

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

We amortize deferred acquisition and fulfillment costs based on the transfer of services on a straight-line basis over the average expected contract life of approximately 36 months for our business customers. We include amortized fulfillment costs in ~~cost~~Cost of services and products and amortized acquisition costs in Selling, general and administrative expenses in our consolidated statements of operations. We include the amount of these deferred costs that are anticipated to be amortized in the next 12 months in ~~other~~Other current assets, onnet ~~our~~and ~~consolidated~~the ~~balance sheets. The amount of~~ deferred costs expected to be amortized beyond 12 months is included in ~~other~~Other ~~non-current~~ assets, net on our consolidated balance sheets. We assess deferred acquisition and fulfillment costs for impairment on a quarterly basis.

Note 5 — Leases

We primarily lease various office facilities, colocation facilities, equipment, and transmission capacity to or from third parties. Leases with an initial term of ~~twelve~~12 months or less are not recorded on our consolidated balance sheets; we recognize lease expense for these leases on a straight-line basis over the lease term.

We determine if an arrangement is a lease at inception and whether that lease meets the classification criteria of a finance or operating lease at the commencement date. Lease-related assets, or right-of-use assets, are recognized at the lease commencement date at amounts equal to the respective lease liabilities. Lease-related liabilities are recognized at the present value of the remaining contractual fixed lease payments, discounted using our incremental borrowing rates. As part of the present value calculation for the lease liabilities, we use an incremental borrowing rate as the rates implicit in the leases are not readily determinable. The incremental borrowing rates used for lease accounting are based on our unsecured rates, adjusted to approximate the rates at which we could borrow on a collateralized basis over a term similar to the recognized lease term. We apply the incremental borrowing rates to lease components using a portfolio approach based upon the length of the lease term and the reporting entity in which the lease resides. Operating lease expense is recognized on a straight-line basis over the lease term, while variable lease payments are expensed as incurred.

Some of our lease arrangements contain lease components, non-lease components (including common-area maintenance costs), and executory costs (including real estate taxes and insurance costs). We generally account for each component separately based on the estimated standalone price of each component. For colocation leases, we account for the lease and non-lease components as a single lease component.

Some of our lease arrangements contain lease components, non-lease components (including common-area maintenance costs) and executory costs (including real estate taxes and insurance costs). We generally account for each component separately based on the estimated standalone price of each component. For colocation leases, we account for the lease and non-lease components as a single lease component.

Many of our lease agreements contain renewal options; however, we do not recognize right-of-use assets or lease liabilities for renewal periods unless we determine that we are reasonably certain of renewing the lease. Certain leases also include options to purchase the leased property. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain to be exercised. Our lease agreements do not generally contain any material residual value guarantees or material restrictive covenants.

Lease expense consisted of the following:

	Years Ended December 31,
	2024		2023	2022
	(Dollars in millions)
Operating and short-term lease cost	$	375	384	348
Finance lease cost:
Amortization of right-of-use assets	18		23	25
Interest on lease liability	10		10	11
Total finance lease cost	28		33	36
Total lease cost	$	403	417	384

We lease various equipment, office facilities, retail outlets, switching facilities and other network sites or components from third parties. These leases, with few exceptions, provide for renewal options and rent escalations that are either fixed or based on the consumer price index. Any rent abatements, along with rent escalations, are included in the computation of rent expense calculated on a straight-line basis over the lease term. The lease term for most leases includes the initial non-cancelable term plus any term under renewal options that we believe are reasonably assured.

On a regular basis, we rationalize our lease footprint. When we determine that we no longer need leased space, we may incur accelerated lease costs. Our accelerated lease costs in December 31, 2024, 2023 and 2022 were not material.Lessee

~~For~~Lease ~~the years ended December 31, 2024, 2023 and 2022, our gross rental~~ expense, ~~including~~consisted ~~the~~of ~~accelerated lease costs discussed above, was $403 million, $417 million and $384 million, respectively. We also received sublease rental income for~~ the ~~years ended December 31, 2024, 2023 and 2022 of $13 million, $14 million and $14 million, respectively.~~following:


	Years Ended December 31,
	2025		2024	2023
	(Dollars in millions)
Operating and short-term lease cost	$	357	375	384
Finance lease cost:
Amortization of right-of-use assets	19		18	23
Interest on lease liability	9		10	10
Total finance lease cost	28		28	33
Total lease cost	$	385	403	417

Supplemental consolidated balance sheet information and other information related to leases is included below:

As of December 31,

December 31,

Leases (Dollars in millions)

~~Classification on the~~ Balance Sheet Classification

~~2024~~2025

~~2023~~2024

Assets

Operating lease assets

Other assets, net(1)

~~918~~897

~~1,056~~918

Finance lease assets

Property, plant and equipment, net of accumulated depreciation

~~175~~162

~~191~~175

Total leased assets

1,~~093~~059

1,~~247~~093

Liabilities

Current

Operating

Current operating lease liabilities(21)

~~266~~241

~~288~~266

Finance

Current maturities of long-term debt

1618

1416

Noncurrent

Operating

Operating lease liabilities(31)

~~719~~717

~~845~~719

Finance

Long-term debt

~~174~~161

~~190~~174

Total lease liabilities

1,~~175~~137

1,~~337~~175

Weighted-average remaining lease term (years)

Operating leases

6.68

76.16

Finance leases

108.12

10.01

Weighted-average discount rate

Operating leases

7.5680

67.6356

Finance leases

4.6973

4.9769

_______________________________________________________________________________

(1) Includes affiliate operating ~~lease~~leases; ~~assets~~see of"Affiliate ~~$234 million~~Leases" ~~and~~below ~~$311~~for ~~million as of December 31, 2024 and 2023, respectively~~details.

(2) Includes current portion of affiliate operating lease liabilities of $113 million and $129 million as of December 31, 2024 and 2023, respectively.

(3) Includes noncurrent portion of affiliate operating lease liabilities of $128 million and $201 million as of December 31, 2024 and 2023, respectively.

Supplemental consolidated cash flow statement information related to leases is included below:

	Years Ended December 31,
	2024		2023
	2025		2024
	(Dollars in millions)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	~~365~~350	~~384~~365
Operating cash flows for finance leases	109		10
Financing cash flows for finance leases	1617		2316
Supplemental lease cash flow disclosures:
Operating lease right-of-use assets obtained in exchange for new operating lease liabilities	$	~~124~~221	~~104~~124
Right-of-use assets obtained in exchange for new finance lease liabilities	26		82

As of December 31, ~~2024~~2025, maturities of lease liabilities were as follows:

	Operating Leases		Finance Leases
	(Dollars in millions)
2025	$	326	25
2026	$	303	26
2026	233		25
2027	208		27
2027	156		26
2028	161		26
2028	114		26
2029	125		24
2029	81		24
2030	83		25
Thereafter	~~378~~392		~~111~~91
Total lease payments	1,~~288~~272		~~237~~219
Less: interest	(~~303~~314)		(4740)
Total	~~985~~958		~~190~~179
Less: current portion	(~~266~~241)		(1618)
Long-term portion	$	~~719~~717	~~174~~161

As of December 31, ~~2024~~2025, we had no material operating or finance leases that had not yet commenced.

~~Operating~~Affiliate ~~Lease Revenue~~Leases

WeThe ~~lease~~following ~~various~~table ~~dark~~presents ~~fiber~~details ~~and~~of ~~conduit,~~affiliate ~~office facilities and colocation facilities to third parties under operating~~ leases. ~~Lease~~reflected ~~and~~on ~~sublease~~our ~~income are included in operating revenue in the~~ consolidated ~~statements~~balance ~~of operations. See "Revenue Recognition" in Note 1—Background and Summary of Significant Accounting Policies.~~sheets:

For the years ended December 31, 2024, 2023 and 2022 our gross rental income was $694 million, $676 million and $746 million, respectively, which represents 11% of our operating revenue for year ended December 31, 2024 and 10% of our operating revenue for each of the years ended December 31, 2023 and 2022.


	Balance Sheet Classification	Years Ended December 31,
		2025		2024
		(Dollars in millions)
Operating lease assets - affiliate	Other assets, net	$	159	234
Current operating lease liabilities - affiliate	Current operating lease liabilities	80		113
Operating lease liabilities - affiliate	Operating lease liabilities	76		128

~~Note 6—Credit Losses on Financial Instruments~~Lessor

We lease various dark fiber and conduit, office facilities, and colocation facilities to third parties under operating leases. Lease and sublease revenue are included in operating revenue in the consolidated statements of operations. See "Revenue Recognition" in Note 1 — Background and Summary of Significant Accounting Policies.

For the years ended December 31, 2025, 2024 and 2023 our gross operating lease revenue was $852 million, $694 million, and $676 million, respectively, which represents 13%, 11%, and 10%, of our operating revenue for the years ended December 31, 2025, 2024, and 2023.

Included in our operating lease revenue is sublease revenue of $11 million, $13 million and $14 million for the years ended December 31, 2025, 2024, and 2023, respectively.

Note 6 — Credit Losses on Financial Instruments

To assess our expected credit losses on financial instruments, we aggregate financial assets with similar risk characteristics to monitor their credit quality or deterioration over the life of such assets. We periodically monitor certain risk characteristics within our aggregated financial assets and revise their composition accordingly, to the extent internal and external risk factors change. We separately evaluate financial assets that do not share risk characteristics with other financial assets. Our financial assets measured at amortized cost primarily consist of accounts receivable.

We use a loss rate method to estimate our allowance for credit losses. Our determination of the current expected credit loss rate begins with our review of historical loss experience as a percentage of accounts receivable. We measure our historical loss period based on the average days to recognize accounts receivable as credit losses. When asset specific characteristics and current conditions change from those in the historical period, due to changes in our credit and collections strategy, certain classes of aged balances, or credit loss and recovery policies, we perform a qualitative and quantitative assessment to adjust our historical loss rate. We use regression analysis to develop an expected loss rate using historical experience and economic data over a forecast period. We measure our forecast period based on the average days to collect payment on billed accounts receivable. To determine our current allowance for credit losses, we combine the historical and expected credit loss rates and apply them to our period end accounts receivable.

If there is an unexpected deterioration of a customer's financial condition or an unexpected change in economic conditions, including macroeconomic events, we assess the need to adjust the allowance for credit losses. Any such resulting adjustments would affect earnings in the period that adjustments are made.

The assessment of the correlation between historical observed default rates, current conditions and forecasted economic conditions requires judgment. Alternative interpretations of these factors could have resulted in different conclusions regarding our allowance for credit losses. The amount of credit loss is sensitive to changes in circumstances and forecasted economic conditions. Our historical credit loss experience, current conditions and forecast of economic conditions may also not be representative of the customers' actual default experience in the future and we may use methodologies that differ from those used by other companies.

The following table presents the activity of our allowance for credit losses for our accounts receivable portfolio:

	Years Ended December 31,
	2024		2023	2022
	2025		2024	2023
	(Dollars in millions)
Balance at beginning of period	$	1312	1913	3919
Provision for expected losses	816		8	48
Write-offs charged against the allowance	(1214)		(1912)	(2219)
Recoveries collected	32		43	34
Change in allowance in assets held for sale(1)	—		1—	~~(5)~~1
Balance at end of period	$	1216	1312	1913

______________________________________________________________________

(1) Represents changes in amounts classified as held for sale related to the divestitures of our ~~Latin American and~~ EMEA ~~businesses~~business prior to the ~~divestitures~~divestiture on ~~August 1, 2022 and~~ November 1, 2023~~, respectively~~. See Note 2 —~~Divestitures~~ ~~of the Latin American and EMEA Businesses~~Divestiture.

Note 7 — Long-Term Debt and Credit Facilities

As of December 31, 2025, all of our outstanding debt (excluding finance leases) had been incurred by Level 3 Financing. The following table reflects our consolidated long-term debt, including finance leases and other obligations, unamortized discounts and premiums, net and unamortized debt issuance costs, but excluding intercompany debt:

			As of December 31,
			December 31,
	Interest Rates (1)	Maturities (1)	~~2024~~2025		~~2023~~2024
			(Dollars in millions)
Level 3 Financing, Inc.
Senior Secured Debt(2):
New Facilities:
Term Loan B-1(3)	N/A	N/A	$	—	1,199
Term Loan B-1(3)	SOFR + 6.56%	2029	$	1,199	—
Term Loan B-2(3)	N/A	N/A	—		1,199
Term Loan B-2(3)	SOFR + 6.56%	2030	1,199		—
Term Loan B-4(4)	SOFR + 3.25%	2032	2,400		—
Former Facility(4)	SOFR + 1.75%	2027	12		2,411
Former Facility Tranche B Term Loan(5)	N/A	N/A	—		12
First Lien Notes(5)	10.500% - 11.000%	2029 - 2030	3,846		925
First Lien notes	6.875% - 7.000%	2033 - 2034	4,425		3,846
Second Lien Notes	3.875% - 10.000%	2029 - 2032	2,579		—
Second Lien notes	3.875% - 4.875%	2029 - 2031	660		2,579
Former Secured Notes(6)	N/A	N/A	—		1,500
Unsecured Senior Notes:
Senior notes(7)	3.400% - 4.625%	2027 - 2029	964		3,940
Senior notes	3.625% - 8.500%	2028 - 2036	2,144		964
Finance leases and other obligations	Various	Various	~~229~~196		~~259~~229
Unamortized (discounts) premiums, net			(~~225~~85)		2(225)
Unamortized debt issuance costs			(~~138~~77)		(54138)
Total long-term debt			9,~~665~~663		89,~~983~~665
Less current maturities			(36)		(3136)
Long-term debt, excluding current maturities			$	9,~~629~~627	$9,629	~~8,952~~

_______________________________________________________________________________

~~N/A~~(1)As -of ~~Not~~December ~~applicable~~31, 2025. All references to "SOFR" refer to the Secured Overnight Financing Rate.

(12)AsThe ofdebt ~~December~~listed ~~31,~~under ~~2024.~~the ~~All~~caption ~~references~~“Senior toSecured ~~"SOFR"~~Debt” ~~refer~~is tosecured ~~the~~by ~~Secured~~assets ~~Overnight~~of Level 3 Financing ~~Rate~~and guaranteed on a secured basis by certain of its affiliates.

(23)AsTerm ~~discussed~~Loan ~~further~~B-1 ~~below in this Note, the debt listed under the caption “Senior Secured Debt” is secured by assets of Level 3 Financing~~ and ~~guaranteed~~B-2 oneach ahas ~~secured~~an ~~basis~~interest byrate ~~certain~~composition of ~~its~~SOFR ~~affiliates.~~+ ~~As discussed further in footnote~~ 6.56%, wewhich ~~reclassified~~was in11.133% ~~the~~as "of December 31, 2024". ~~column~~As ofdescribed ~~the~~below, ~~table~~this ~~above~~indebtedness ~~certain~~was ~~notes~~refinanced ~~that~~during ~~were secured prior to~~ the ~~TSA~~first ~~Effective~~quarter ~~Date (as defined below) from "secured" to "unsecured" in light~~ of ~~amendments that released such prior security interests~~2025.

(34)~~The~~ Term Loan B-14 ~~and~~has ~~B-2 each had~~ an interest rate composition of 11SOFR + 3.~~133~~25% which was 7.166% as of December 31, ~~2024~~2025.

(45)~~Reflects~~ Level 3 Financing's Former Facility Tranche B 2027 Term Loan ~~issued under a predecessor facility, which~~ had an interest rate composition of 6SOFR + 1.~~437~~75%, ~~and~~which 7was 6.~~220~~437% as of December 31, 2024 ~~and December 31, 2023, respectively~~.

(5)Includes Level 3 Financing's 10.500% Senior Secured Notes due 2030 issued in early 2023, the terms of which have been amended to be consistent with Level 3 Financing's First Lien Notes issued on March 22, 2024.

(6)Two series of former Level 3 Senior Notes due in 2027 and 2029 bearing interest rates of 3.400% and 3.875% as of December 31, 2023, were amended on the TSA Effective Date in the manner discussed in Note 7—Long-Term Debt.

(7)The total debt for these notes at December 31, 2024 includes the remaining aggregate principal amount due under Level 3 Financing's Former Secured Notes, the terms of which were amended on March 22, 2024 to release the security interests relating thereto.

Long-Term Debt Maturities

Set forth below is the aggregate principal amount of our long-term debt as of December 31, ~~2024~~2025 (excluding unamortized (discounts) premiums, net, unamortized debt issuance costs and intercompany debt) maturing during the following years:

	(Dollars in millions)
2025	$	36
2026	$	36
2026	35
2027	19
2027	101
2028	198
2028	197
2029	1,341
2029	4,782
2030	53
2030 and thereafter	4,877
2031 and thereafter	8,178
Total long-term debt	$	109,~~028~~825

2025 Debt Transactions

During 2025, we completed various debt refinancing, term loan repricing, and further debt reduction transactions described below, which resulted in a $739 million net loss on early retirement of debt, recognized in Total other expense, net in our consolidated statement of operations for the year ended December 31, 2025. Additionally, these transactions resulted in early call premiums which were funded by proceeds from our debt issuances and are reflected as Debt issuance and extinguishment costs and related fees within our financing activities in our consolidated statements of cash flow.

Second Lien Notes Refinancing — Fourth Quarter 2025

On December 23, 2025, Level 3 Financing issued $1.25 billion of 8.500% Senior Notes due 2036. On such date, Level 3 Financing used the net proceeds from the offering, together with cash on hand for the 2025 Early Settlement Cash Tender Offers (as defined herein) noted below.

Cash Tender Offers — Fourth Quarter 2025

Pursuant to cash tender offers that commenced on December 8, 2025 (the "2025 Early Settlement Cash Tender Offers"), in December 2025 we reduced the aggregate principal amount of our consolidated indebtedness by $1.6 billion as described in the table below. The Company determined that the Second Lien Notes Refinancing constituted a debt extinguishment and recorded a loss of $74 million in our aggregate Net (loss) gain on early retirement of debt in Other income, net in our consolidated statement of operations for the year ended December 31, 2025.

The following table sets forth the aggregate principal amount of each series of second lien notes of Level 3 Financing retired in exchange for cash in December 2025 in connection with the 2025 Early Settlement Cash Tender Offers:


Debt	Aggregate Principal Amount
	(Dollars in millions)

3.875% Second Lien Notes due 2030	$	434
4.500% Second Lien Notes due 2030	703
4.000% Second Lien Notes due 2031	432
Total	$	1,569

Term Loan Repayments — Fourth Quarter 2025

During the fourth quarter of 2025 we repaid all $12 million of the outstanding Former Facility Tranche B Term Loan due 2027.

Second Credit Facilities Refinancing — Third Quarter 2025

On September 29, 2025, Level 3 Financing (i) refinanced all of the outstanding secured Term Loan B-3 facilities under its Existing Credit Agreement (as defined below) and (ii) entered into an amendment to the Existing Level 3 Credit Agreement (collectively, the "Second Credit Facilities Transactions" and the Existing Level 3 Credit Agreement as amended in connection with the Second Credit Facilities Transactions, the "Level 3 Credit Agreement"). This amendment revised the Existing Level 3 Credit Agreement to, among other things, reduce the pricing on Level 3 Financing’s term loan facility and make related changes to effect such repricing. Immediately following the Second Credit Facilities Transactions, Level 3 Financing had $2.4 billion of outstanding borrowings under its new secured Term Loan B-4 facility.

The Company determined that the Second Credit Facilities Transactions constituted a debt extinguishment and recorded a loss of $56 million, which is included in our aggregate Net (loss) gain on early retirement of debt in Total other expense, net in our consolidated statement of operations for the year ended December 31, 2025.

First Lien Note Refinancings — Third Quarter 2025

On August 18, 2025, Level 3 Financing issued $2.0 billion of its 7.000% First Lien Notes due 2034. On such date, Level 3 Financing used the net proceeds from the offering, together with cash on hand, to redeem (i) all $1.4 billion aggregate principal amount of its then-outstanding First Lien 11.000% Senior Secured Notes due 2029 and (ii) $305 million aggregate principal amount of its outstanding 10.750% First Lien Notes due 2030, in each case, including the payment of redemption premium and accrued interest, as well as related fees and expenses.

Additionally, on September 8, 2025, Level 3 Financing issued an additional $425 million aggregate principal amount of 7.000% First Lien Notes due 2034. On September 14, 2025, Level 3 Financing used the net proceeds from the offering, together with cash on hand, to redeem the remaining $373 million aggregate principal amount of its outstanding 10.750% First Lien Notes due 2030, including the payment of redemption premium and accrued interest, as well as related fees and expenses.

The Company determined that these refinancings constituted debt extinguishments and recorded a loss of $344 million, which is included in our aggregate Net (loss) gain on early retirement of debt in Total other expense, net in our consolidated statements of operations for the year ended December 31, 2025.

First Lien Note Refinancing — Second Quarter 2025

On June 30, 2025, Level 3 Financing issued $2.0 billion of 6.875% First Lien notes due 2033. On such date, Level 3 Financing used the net proceeds from the offering, together with cash on hand, to redeem (i) all $925 million aggregate principal amount of Level 3 Financing's then-outstanding First Lien 10.500% Senior Secured Notes due 2030, (ii) all $668 million aggregate principal amount of Level 3 Financing’s then-outstanding 10.500% First Lien Notes due 2029, and (iii) $167 million aggregate principal amount of Level 3 Financing’s outstanding 11.000% First Lien Notes due 2029, in each case, including the payment of redemption premium and accrued interest, as well as related fees and expenses.

The Company determined this refinancing constituted a debt extinguishment and recorded a loss of $236 million, which is included in our aggregate Net (loss) gain on early retirement of debt in Total other expense, net in our consolidated statement of operations for the year ended December 31, 2025.

First Credit Facilities Refinancing — First Quarter 2025

On March 27, 2025, Level 3 Financing (i) refinanced all of the outstanding secured Term Loan B-1 facilities and secured Term Loan B-2 facilities under its Credit Agreement dated March 22, 2024 (the "Original Level 3 Credit Agreement") by and among Level 3 Financing, as borrower, Level 3 Parent, as guarantor, Wilmington Trust, National Association, as administrative agent and collateral agent, and the lenders from time to time party thereto and (ii) entered into an amendment to the Original Level 3 Credit Agreement (collectively, the "First Credit Facilities Transactions"; the Original Credit Agreement as amended in connection with the First Credit Facilities Transactions, the "Existing Level 3 Credit Agreement"). This amendment revised the Original Level 3 Credit Agreement to, among other things, (i) reduce the pricing on Level 3 Financing’s term loan facility and make related changes to effect such repricing and (ii) extend the maturity of Level 3 Financing's term loan facility to 2032. Immediately following the First Credit Facilities Transactions, Level 3 Financing had $2.4 billion of outstanding borrowings under its new secured Term Loan B-3 facility.

The Company determined that the First Credit Facilities Transactions constituted a debt extinguishment and recorded a loss of $34 million, which is included in our aggregate Net (loss) gain on early retirement of debt in Total other expense, net in our consolidated statement of operations for the year ended December 31, 2025.

Cash Redemption — Third Quarter 2025

On September 30, 2025, Level 3 Financing fully redeemed $350 million in aggregate principal amount of its 10.000% Second Lien Notes due 2032 in exchange for cash. Transaction fees related to this redemption were not significant.

Cash Redemptions — First Quarter 2025

The following table sets forth the aggregate principal amount of each series of unsecured senior notes of Level 3 Financing fully redeemed in exchange for cash on February 15, 2025. Transaction fees related to these redemptions were not significant.


Debt Redeemed on February 15, 2025	Aggregate Principal Amount
	(Dollars in millions)

3.400% unsecured Senior Notes due 2027	$	5
4.625% unsecured Senior Notes due 2027	65
Total	$	70

2024 Debt Transactions

Cash Tender Offers

Pursuant to cash tender offers that commenced on November 12, 2024 (the "Cash Tender Offers"), in November 2024 we reduced the aggregate principal amount of our consolidated indebtedness by ~~approximately~~ $324 million. In conjunction with the Cash Tender Offers, we recorded a gain of $31 million including an offset of immaterial third-party fees in our aggregate Net (loss) gain on early retirement of debt in Other income, net in our consolidated statement of operations for the year ended December 31, 2024.

The following table sets forth the aggregate principal amount of each series of senior notes retired in exchange for cash in November 2024 in connection with the Cash Tender Offers:

Debt	Aggregate Principal Amount
	(Dollars in millions)
Level 3 Financing, Inc.
3.400% Senior Secured Notes due 2027 (unsecured)	$	1
4.625% Senior Notes due 2027	48
4.250% Senior Notes due 2028	275
Total	$	324

Exchange Offers

Pursuant to exchange offers that commenced on September 3, 2024 (the "Exchange Offers"), on September 24, 2024, Level 3 Financing issued ~~approximately~~ $350 million aggregate principal amount of its newly-issued 10.000% Second Lien Notes due 2032 in exchange for $357 million aggregate principal amount of two series of its outstanding senior unsecured notes maturing in 2027 (which were concurrently cancelled). These transactions reduced the aggregate principal amount of Level 3 Financing's consolidated indebtedness by ~~approximately~~ $7 million. The Company determined that the Exchange Offers constituted a debt modification consistent with ASC 470 and recorded no gain or loss. In conjunction with the Exchange Offers, we recorded $8 million of fees to Selling, general and administrative expense in our consolidated statements of operations for the year ended December 31, 2024.

The following table sets forth the aggregate principal amount of each series of senior unsecured notes of Level 3 Financing exchanged and retired on September 24, 2024 in connection with the Exchange Offers:

Debt	Aggregate Principal Amount
	(Dollars in millions)
Level 3 Financing, Inc.
3.400% Senior Secured Notes due 2027 (unsecured)	$	77
3.400% senior secured notes due 2027 (unsecured)	$	77
4.625% Senior Notes due 2027	280
4.625% senior notes due 2027	280
Total	$	357

Transaction Support Agreement Transactions

On March 22, 2024 (the "TSA Effective Date"), the TSA Parties completed the TSA Transactions, including the termination, repayment or exchange of previous commitments and debt of Level 3 Financing and the issuance of new term loan facilities and notes by Level 3 Financing.

The following table sets forth the aggregate principal amount of (i) former debt of Level 3 Financing exchanged for new Level 3 Financing debt and (ii) new debt issued by Level 3 in exchange for former Level 3 debt (except as otherwise noted), in each case during the first quarter of 2024 in connection with the TSA Transactions:

Former notes or facility exchanged	New notes or facility issued	Aggregate principal amount exchanged/issued~~(1)~~
		(Dollars in millions)
Term Loan B	Term Loan B-1, B-2	$	2,398
3.400% Senior Notes due 2027	10.500% First Lien Notes due 2029	668
4.625% Senior Notes due 2027	4.875% Second Lien Notes due 2029	606
3.875% Senior Notes due 2029	10.750% First Lien Notes due 2030	678
4.250% Senior Notes due 2028	4.500% Second Lien Notes due 2030	712
3.625% Senior Notes due 2029	3.875% Second Lien Notes due 2030	458
3.750% Senior Notes due 2029	4.000% Second Lien Notes due 2031	453
N/A	11.000% First Lien Notes due 2029~~(2)~~	1,575
Total		$	7,548

______________________________________________________________________

N/A - Not applicable

~~(1)See~~In evaluating the terms of the TSA Transactions, we determined that for certain of our ~~long~~creditors the new debt instruments were substantially different than pre-~~term~~existing debt ~~table~~and ~~above~~therefore constituted a non-cash extinguishment of old debt of $2.6 billion and the establishment of new debt for ~~information~~which we recorded a gain on extinguishment in the ~~amount~~first quarter of ~~former~~2024. This new debt ~~that~~was ~~remains~~recorded ~~outstanding~~at asfair value generating a reduction to debt of $261 million which resulted in a net gain of $54 million, and is included in our aggregate Net (loss) gain on early retirement of debt in Other income, net in our consolidated statement of operations for the year ended December 31, 2024. The remaining creditors’ debt was not substantially different under the terms of the TSA Transactions and was treated under modification accounting rules. In conjunction with the TSA Transactions, we paid $209 million in lender fees and $112 million in additional third-party costs. Of these amounts, we offset $157 million of lender fees against the gain on extinguishment and recorded $61 million in third-party costs to Selling, general and administrative expense in our consolidated statement of operations for the year ended December 31, 2024. In accordance with GAAP provisions for modification and extinguishment accounting, $52 million in lender fees and $51 million in third-party costs, respectively, were capitalized and will be amortized over the terms of the newly-issued indebtedness.

In evaluating the terms of the TSA Transactions, we determined that for certain of our creditors the new debt instruments were substantially different than pre-existing debt and therefore constituted a non-cash extinguishment of old debt of $2.6 billion and the establishment of new debt for which we recorded a gain on extinguishment in the first quarter of 2024. This new debt was recorded at fair value generating a reduction to debt of $261 million which resulted in a net gain of $54 million, and is included in our aggregate Net gain on early retirement of debt in Other income, net in our consolidated statement of operations for the year ended December 31, 2024. The remaining creditors’ debt was not substantially different under the terms of the TSA Transactions and was treated under modification accounting rules. In conjunction with the TSA Transactions, we paid $209 million in lender fees and $112 million in additional third-party costs. Of these amounts, we offset $157 million of lender fees against the gain on extinguishment and recorded $61 million in third-party costs to Selling, general and administrative expense in our consolidated statement of operations for the year ended December 31, 2024. In accordance with GAAP provisions for modification and extinguishment accounting, $52 million in lender fees and $51 million in third-party costs, respectively, were capitalized and will be amortized over the terms of the newly-issued indebtedness.

Repurchases of Debt Instruments

During 2024, Level 3 Financing repurchased various debt instruments on the open market. These repurchases resulted in an aggregate net gain of $34 million which is included in our aggregate Net (loss) gain on early retirement of debt in Other income, net in our consolidated statement of operations for the year ended December 31, 2024. The following table sets forth the aggregate principal amount of each series of notes repurchased during the year ended December 31, 2024:

Debt	Principal Amount Repurchased~~(in millions)~~
Level 3 Financing, Inc.
	(Dollars in millions)
4.250% Senior Notes due 2028	$	34
3.625% Senior Notes due 2029	81
3.750% Sustainability-Linked Senior Notes due 2029	86
3.875% Senior Secured Notes due 2029 (unsecured)	18
Total	$	219

~~2023 Debt Modification Transactions~~79

2023 Debt Transactions

Exchange Offers

Pursuant to exchange offers that commenced on March 16, 2023 (the “2023 Exchange Offers”), on March 31, 2023, Level 3 Financing issued $915 million of its 10.500% Senior Secured Notes due 2030 (the “10.500% Notes”) in exchange for $1.535 billion of Lumen’s outstanding senior unsecured notes.

On April 17, 2023, in connection with the 2023 Exchange Offers, Level 3 Financing issued an additional $9 million of its 10.500% Notes in exchange for $19 million of Lumen's outstanding senior unsecured notes.

Level 3 Financing Credit Agreements

Credit Agreement dated March 22, 2024

On the TSA ~~effective~~Effective ~~date~~Date, Level 3 Financing, as borrower, Level 3 Parent, LLC. the lenders party thereto and ~~Wilmington Trust~~WTNA, ~~National Association,~~ as administrative agent and collateral agent, entered into ~~a credit agreement (~~the ~~"New~~Original Level 3 Credit Agreement"), providing for:

• a secured term B-1 loan facility in the principal amount of approximately $1.2 billion maturing April 15, 2029; and

•a secured term B-2 loan facility in the principal amount of approximately $1.2 billion maturing April 15, 2030.

~~Interest~~Pursuant onto ~~borrowings~~the First Credit Facilities Transactions, Level 3 Financing refinanced all of the outstanding secured Term Loan B-1 facilities and secured Term Loan B-2 facilities under the ~~New~~Original Level 3 Credit Agreement isunder ~~payable~~its atnew secured Term Loan B-3 facility. Pursuant to the ~~end~~Second Credit Facilities Transactions, Level 3 Financing refinanced all of ~~each~~the ~~interest~~outstanding ~~period~~secured Term Loan B-3 facilities under the Existing Level 3 Credit Agreement under its new secured Term Loan B-4 facility.

atAs aof ~~rate~~December ~~equal~~31, to2025, at Level 3 Financing’s ~~option,~~had ~~term~~$2.4 billion ~~SOFR~~of ~~(subject~~non-amortizing tosecured aTerm ~~2.000%~~Loan ~~floor)~~B-4 ~~plus~~outstanding ~~6.56%~~under ~~for~~the term ~~SOFR~~loan facility established by the Level 3 Credit Agreement.

~~loans~~Borrowings orunder athe Term Loan B-4 facility will be, at Level 3 Financing’s option, either (i) the base rate (which is the highest of (x) the overnight federal funds rate, plus 50.5650%, ~~for~~(y) ~~base~~the prime rate on such day, and (z) the one-month SOFR published on such date, plus 1.00%), plus an applicable margin, or (ii) one-, three- or six-month SOFR, plus an applicable margin. The applicable margin for SOFR loans under the Term Loan B-4 will be 3.25%. The Term Loan B-4 is subject to a SOFR floor of 0.00%.

~~Amounts outstanding under the New~~ Level 3 ~~Agreement~~Financing may bevoluntarily ~~prepaid~~prepay atloans ~~any~~or ~~time,~~reduce ~~subject~~commitments tounder athe ~~premium~~Level of3 ~~(i)~~Credit ~~2.00%~~Agreement, ofin ~~the~~whole ~~aggregate~~or ~~principal~~in ~~amount~~part, ifsubject ~~prepaid~~to onminimum oramounts, with prior tonotice, ~~the~~but ~~12-month~~without ~~anniversary~~premium ofor ~~the~~penalty ~~TSA~~(other ~~Effective~~than ~~Date~~a ~~and (ii)~~ 1.00% ofpremium ~~the~~on ~~aggregate~~any ~~principal~~prepayment ~~amount~~in ifconnection ~~prepaid~~with ~~after~~a ~~the~~repricing ~~12-month~~transaction ~~anniversary~~prior ofto ~~the~~March ~~TSA~~29, ~~Effective~~2026). ~~Date~~Level ~~and~~3 onFinancing oris ~~prior~~required to prepay borrowings under the ~~24-month~~term ~~anniversary~~loan facility with 100% of the ~~TSA~~net ~~Effective~~cash ~~Date.~~proceeds ~~The~~of ~~New~~certain ~~Level~~asset 3sales ~~Facilities~~and ~~require~~100%

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