Results

Qwest Corporation

10/30/2025 | Press release | Distributed by Public on 10/30/2025 14:26

Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
All references to "Notes" in this Item 2 of Part I refer to the Notes to Consolidated Financial Statements included in Item 1 of Part I of this report. Certain statements in this report constitute forward-looking statements. See "Special Note Regarding Forward-Looking Statements" immediately prior to Item 1 of Part I of this report for factors relating to these statements and "Risk Factors" in Item 1A of Part II of this report and in Item 1A of Part I of our Annual Report on Form 10-K for the year ended December 31, 2024 or other of our filings with the SEC for a discussion of certain factors applicable to our business, financial condition, results of operations, liquidity, or prospects.
Overview
Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") included herein should be read in conjunction with the information included in our Annual Report on Form 10-K for the year ended December 31, 2024 and with the consolidated financial statements and related notes in Item 1 of Part I of this report. The results of operations and cash flows for the first nine months of the year are not necessarily indicative of the results of operations and cash flows that might be expected for the entire year.
We are a leading digital networking services company empowering enterprise businesses to 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 and our domestic Mass Markets customers. Our specific products and services are detailed below under the heading "Products, Services and Revenue".
Our ultimate parent company, Lumen Technologies, Inc., has cash management or loan arrangements with a majority of its subsidiaries that include lines of credit, affiliate obligations, capital contributions and dividends. As part of these cash management or loan arrangements, affiliates provide lines of credit to certain other affiliates. Amounts outstanding under these lines of credit and intercompany obligations vary from time to time. Under these arrangements, the majority of our cash balance is advanced on a daily basis for centralized management by Lumen's service company affiliate. From time to time we may declare and pay dividends to Qwest Services Corporation ("QSC"), our direct parent, using cash owed to us under these advances, which has the net effect of reducing the amount of these advances. We report the balance of these transfers on our consolidated balance sheets as advances to affiliates.
At September 30, 2025, we served approximately 1.3 million broadband subscribers. Our methodology for counting broadband subscribers may be different than the methodologies used by other companies.
Planned Divestiture of the Lumen Mass Markets Fiber-to-the-Home Business
On May 21, 2025, we and certain of our affiliates entered into a definitive agreement to sell to AT&T the Lumen Mass Markets fiber-to-the-home business (including approximately 95% of Quantum Fiber) operated by us and certain of our affiliates in 11 states for a pre-tax total of $5.75 billion in cash, subject to working capital and other various purchase price adjustments. We expect to close this transaction in early 2026, although we can provide no assurance to this effect. The actual amount of net after-tax proceeds from this divestiture could vary from the amounts we currently estimate. The sales of fiber assets to AT&T will not result in Lumen fully exiting its fiber business in any state. For additional information, see Note 2-Planned Divestiture of the Lumen Mass Markets Fiber-to-the-Home Business.
Macroeconomic Changes
Over the past few years, macroeconomic changes have impacted us and our customers in several ways.
We believe macroeconomic changes over the past few years have resulted in (i) increases in certain revenue streams and decreases in others, (ii) operational challenges resulting from inflation and shortages of certain components and other supplies that we use in our business, (iii) delays in our cost transformation initiatives and (iv) delayed decision-making by certain of our customers. We do not believe these effects, individually or in the aggregate, have to date materially impacted our financial performance or financial position.
Industry developments over the past few years have increased fiber construction demand from customers. The resulting increase in construction labor rates continue to increase the cost of enabling units to be capable of receiving Lumen's Quantum Fiber broadband services. We believe these factors also occasionally contributed to a delay in attaining Quantum Fiber buildout targets in our service area.
Continued business and geopolitical uncertainty, new tariffs, supply constraints, or inflationary pressures could materially impact our financial results in a variety of ways, including by increasing our expenses, decreasing our revenues, further delaying our network expansion plans, further delaying customer decision-making, or otherwise interfering with our ability to deliver products and services.
To the extent these above-mentioned macroeconomic pressures continue, we could experience additional deterioration in our projected cash flows, or make significant changes to the assumed discount rates or market multiples that we use to determine the fair value of our reporting unit.
Products, Services and Revenue
We categorize our revenue derived from our operations based on the customers we serve, as follows: (i) revenue derived from serving our Mass Markets customers are categorized primarily within the first three categories listed below, (ii) revenue derived from servicing our Business customers are categorized primarily in the 'Harvest', 'Nurture' and 'Grow' categories listed below, and (iii) revenue derived from serving our affiliates are categorized in the 'Affiliate Services' category listed:
•Other Broadband, under which we provide primarily lower speed broadband services to residential and small business customers utilizing our copper-based network infrastructure;
•Voice and Other,under which we derive revenues from (i) providing local and long-distance services, professional services, and other ancillary services, (ii) federal broadband and state support payments, and (iii) equipment, IT solutions and other services;
•Fiber Broadband, under which we provide high speed broadband services to residential and small business customers utilizing our fiber-based network infrastructure;
•Harvest, which includes our legacy services managed for cash flow, including Time Division Multiplexing voice and private line services;
•Nurture, which includes our more mature offerings, including primarily ethernet;
•Grow, which includes existing and emerging products and services in which we are significantly investing, including our dark fiber and wavelengths services; and
•Affiliate Services, which are (i) communications services that we provide to our affiliates and also provide to external customers and (ii) application development and support services that we provide to our affiliates, as described further in Note 8-Affiliate Transactions.
From time to time, we may change the categorization of our products and services.
The following analysis is organized to provide the information we believe will be useful for understanding material trends affecting our business.
Results of Operations
The following table summarizes the results of our consolidated operations for the three and nine months ended September 30, 2025 and 2024:
Three Months Ended September 30, Nine Months Ended September 30,
2025 2024 2025 2024
(Dollars in millions)
Operating revenue $ 1,161 1,363 3,589 4,144
Operating expenses 918 865 2,581 2,621
Operating income 243 498 1,008 1,523
Total other income (expense), net 4 (1) - (29)
Income before income taxes 247 497 1,008 1,494
Income tax expense 71 132 271 398
Net income $ 176 365 737 1,096
For a discussion of certain trends that impact our business, see the MD&A discussion of trends impacting Lumen's business included in Lumen's reports filed with the SEC, including most recently its Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2025.
Operating Revenue
The following table summarizes our consolidated operating revenue recorded under our revenue categories described in Note 4-Revenue Recognition:
Three Months Ended September 30, Nine Months Ended September 30,
2025 2024 % Change 2025 2024 % Change
(Dollars in millions) (Dollars in millions)
Other Broadband $ 186 226 (18) % 588 716 (18) %
Voice and Other 111 127 (13) % 336 391 (14) %
Fiber Broadband 78 92 (15) % 246 289 (15) %
Harvest 199 225 (12) % 633 704 (10) %
Nurture 79 90 (12) % 248 268 (7) %
Grow 31 33 (6) % 97 100 (3) %
Affiliate Services 477 570 (16) % 1,441 1,676 (14) %
Total revenue $ 1,161 1,363 (15) % 3,589 4,144 (13) %
Total operating revenue decreased by $202 million and $555 million, respectively, for the three and nine months ended September 30, 2025 as compared to the three and nine months ended September 30, 2024. Within each product category, these decreases were primarily due to the following factors:
•Decreases in Other Broadband of $40 million and $128 million, respectively, primarily due to fewer Mass Market customers for our lower speed copper-based broadband services;
•Decreases in Voice and Other of $16 million and $55 million, respectively, principally due to the continued loss of copper-based Mass Market voice customers and a decrease of $11 million due to the voluntary relinquishment of our funding received under the FCC's Rural Digital Opportunity Fund ("RDOF") in the second quarter of 2025. See the "Liquidity and Capital Resources-Future Contractual Obligations" in Item 2 of Part I below for more information;
•Decreases in Fiber Broadband of $14 million and $43 million, respectively, driven by fewer Mass Market subscribers for our fiber services, primarily as a result of customers migrating to the Quantum Fiber services offered by Lumen (which bills customers for such services and pays us for use of our network in providing such services, as further described below);
•Decreases in Harvest of $26 million and $71 million, respectively, primarily attributable to declines in legacy voice and copper broadband services for Business customers of $12 million and $52 million, respectively, and declines in private line services of $12 million and $15 million, respectively;
•Decreases in Nurture of $11 million and $20 million, respectively, primarily due to declines in Ethernet services;
•Grow revenues were relatively flat period over period; and
•Decreases in Affiliate Services of $93 million and $235 million, respectively, primarily due to (i) a decrease of $101 million and $299 million, respectively, in direct legacy telecommunication services provided to our affiliates and (ii) for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024, a decrease of $5 million in employee shared services expense allocated to our affiliates. These decreases were partially offset by an increase of $2 million and $68 million, respectively, in fiber broadband services provided to our affiliates and for the three months ended September 30, 2025 compared to the three months ended September 30, 2024, an increase of $6 million in employee shared services expense allocated to our affiliates.
Operating Expenses
The following table summarizes our consolidated operating expenses:
Three Months Ended September 30, Nine Months Ended September 30,
2025 2024 % Change 2025 2024 % Change
(Dollars in millions) (Dollars in millions)
Cost of services and products (exclusive of depreciation and amortization) $ 379 389 (3) % 1,096 1,132 (3) %
Selling, general and administrative 156 111 41 % 356 357 (-) %
Operating expenses - affiliates 221 182 21 % 602 575 5 %
Depreciation and amortization 162 183 (11) % 527 557 (5) %
Total operating expenses $ 918 865 6 % 2,581 2,621 (2) %
Cost of Services and Products (exclusive of depreciation and amortization)
Cost of services and products (exclusive of depreciation and amortization) decreased by $10 million and $36 million, respectively, for the three and nine months ended September 30, 2025 as compared to the three and nine months ended September 30, 2024. The decrease was primarily due to lower employee-related expenses of $14 million and $50 million partially offset by higher network and facilities expense of $4 million and $11 million for each respective period.
Selling, General and Administrative
Selling, general and administrative expenses increased by $45 million and decreased by $1 million, respectively, for the three and nine months ended September 30, 2025 as compared to the three and nine months ended September 30, 2024. For the three months ended September 30, 2025 compared to the three months ended September 30, 2024, the increase was primarily due to an increase of $41 million in professional fees and legal expenses. For the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024, the decrease was primarily due to (i) a decrease of $27 million employee-related expenses and (ii) a decrease of $11 million in bad debt expense. These decreases were partially offset by (i) an increase of $34 million in professional fees and legal expenses and (ii) an increase of $12 million due to fees related to the voluntary relinquishment of our funding received under the FCC's Rural Digital Opportunity Fund ("RDOF").
Operating Expenses - Affiliates
Operating expenses - affiliates increased by $39 million and $27 million, respectively, for the three and nine months ended September 30, 2025 as compared to the three and nine months ended September 30, 2024. These increases were due to an increase of $31 million and $43 million, respectively, in allocated employee and professional services provided to us by our affiliates and an increase of $11 million of network services purchased from affiliates for the three months ended September 30, 2025, as compared to September 30, 2024. These increases were partially offset by decreases of $3 million and $13 million, respectively, in direct telecommunication services charged to us by our affiliates.
Depreciation and Amortization
The following table details our depreciation and amortization expense:
Three Months Ended September 30, Nine Months Ended September 30,
2025 2024 % Change 2025 2024 % Change
(Dollars in millions) (Dollars in millions)
Depreciation $ 154 179 (14) % 502 528 (5) %
Amortization 8 4 100 % 25 29 (14) %
Total depreciation and amortization $ 162 183 (11) % 527 557 (5) %
Depreciation expense decreased by $25 million and $26 million, respectively, for the three and nine months ended September 30, 2025 as compared to the three and nine months ended September 30, 2024. These decreases are attributable to a decrease of $25 million and $40 million for the three and nine months ended September 30, 2025, as compared to the three and nine months ended September 30, 2024, due to the discontinuation during the second quarter of 2025 of the depreciation of the tangible assets of the Lumen Mass Markets fiber-to-the-home business held for sale. These decreases were partially offset by an increase of $14 million due to net growth in depreciable assets for the nine months ended September 30, 2025, as compared to the nine months ended September 30, 2024.
Amortization expense increased by $4 million and decreased by $4 million, respectively, for the three and nine months ended September 30, 2025 as compared to the three and nine months ended September 30, 2024 primarily due to a net change in the amount of amortizable assets.
Other Consolidated Results
The following tables summarize our total other expense, net and income tax expense:
Three Months Ended September 30, Nine Months Ended September 30,
2025 2024 % Change 2025 2024 % Change
(Dollars in millions) (Dollars in millions)
Interest expense $ (25) (11) 127 % (71) (44) 61 %
Interest income-affiliate, net 26 8 nm 63 14 nm
Other income, net 3 2 50 % 8 1 nm
Total other income (expense), net $ 4 (1) nm - (29) (100) %
Income tax expense $ 71 132 (46) % 271 398 (32) %
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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 by $14 million and $27 million for the three and nine months ended September 30, 2025 respectively, as compared to the three and nine months ended September 30, 2024, primarily due to lower capitalized interest of $14 million and $33 million, respectively, which was partially offset by a decrease in our average interest rate from 6.79% to 6.69% for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2025.
Interest Income - Affiliate, Net
Interest income - affiliate, net increased by $18 million and $49 million, respectively, for the three and nine months ended September 30, 2025 as compared to the three and nine months ended September 30, 2024. The increase in interest income - affiliate, net was primarily due to a higher average receivable from affiliates.
Income Tax Expense
For the three and nine months ended September 30, 2025, our effective tax rate was 28.7% and 26.9%, respectively. For both the three and nine months ended September 30, 2024, our effective tax rate was 26.6%.
Liquidity and Capital Resources
Overview of Sources and Uses of Cash
We are an indirectly wholly-owned subsidiary of Lumen Technologies, Inc. As such, factors relating to, or affecting, Lumen's liquidity and capital resources could have material impacts on us, including impacts on our credit ratings, our access to capital markets, and changes in the financial market's perception of us.
Our ultimate parent company, Lumen Technologies, Inc., has cash management arrangements or loan arrangements with a majority of its subsidiaries that include lines of credit, affiliate obligations, capital contributions and dividends. As part of these cash management or loan arrangements, affiliates provide lines of credit to certain other affiliates. Amounts outstanding under these lines of credit and intercompany obligations vary from time to time. Under these arrangements, the majority of our cash balance is advanced on a daily basis for centralized management by Lumen's service company affiliate. From time to time we may declare and pay dividends to QSC, our direct parent, sometimes in excess of our earnings to the extent permitted by applicable law, using cash owed to us under these advances, which has the net effect of reducing the amount of these advances. Our debt covenants do not currently limit the amount of dividends we can pay to QSC. Given the amounts due to us from Lumen Technologies, Inc. under the above-described cash management or loan arrangements and the revolving promissory note described in Note 8-Affiliate Transactions, a significant component of our liquidity is dependent upon Lumen's ability to repay its obligations to us.
We believe that our cash and cash equivalents as of September 30, 2025 and current sources of funding will provide sufficient liquidity to enable the Company to meet its cash requirements for at least the next twelve months. We anticipate that our future liquidity needs will be met through (i) our cash provided by our operating activities, (ii) amounts due to us from Lumen Technologies, (iii) our ability to refinance QC's debt securities to the extent permitted under applicable debt covenants, and (iv) capital contributions, advances, or loans from Lumen Technologies or its affiliates if and to the extent they have available funds or access to available funds that they are willing and able to contribute, advance, or loan.
On July 4, 2025, the U.S. enacted H.R.1, "A bill to provide for reconciliation pursuant to Title II of H. Con. Res. 14," commonly referred to as the One Big Beautiful Bill Act (the "OBBBA"). We do not expect the tax provisions of the OBBBA to have a material impact on our 2025 effective tax rate. We continue to assess its impact on our consolidated financial statements.
Capital Expenditures
We incur capital expenditures on an ongoing basis in order to expand and improve our service offerings, enhance and modernize our networks, and compete effectively in our markets. Lumen Technologies and we evaluate capital expenditure projects based on a variety of factors, including expected strategic impacts (such as forecasted impact on revenue growth, productivity, expenses, service levels, and customer retention) and the expected return on investment. The amount of Lumen's consolidated capital investment, and our portion thereof, is influenced by, among other things, demand for Lumen's services and products, our network requirements, cash flow generated by operating activities, cash required for debt services and other purposes, regulatory considerations (such as governmentally mandated infrastructure buildout requirements), and the availability of requisite supplies, labor, and permits.
Our capital expenditures continue to be focused on enhancing network operating efficiencies, supporting new service developments, and expanding our fiber network, including our Quantum Fiber buildout plan. A portion of our capital expenditures are also expected to be focused on replacing aged network assets. For more information on our capital spending, see (i) "Cash Flow Activities-Investing" below and (ii) Item 1A of Part I of our Annual Report on Form 10-K for the year ended December 31, 2024.
Debt and Other Financing Arrangements
As of September 30, 2025, we had approximately $1.7 billion aggregate outstanding indebtedness (excluding finance leases, unamortized premiums, net and unamortized debt issuance costs), none of which is due in the next 12 months. For additional information, see Note 5-Long-Term Debt.
Subject to market conditions, and to the extent permitted under applicable debt covenants, Qwest Corporation may issue debt securities from time to time primarily to refinance a portion of its maturing debt. The availability, interest rate and other terms of any new borrowings will depend on the ratings assigned to Qwest Corporation by credit rating agencies, among other factors.
As of the filing date of this report, the credit ratings for Qwest Corporation's senior unsecured debt were as follows:
Agency Credit Ratings
Moody's Investors Service, Inc.(1)
Caa2
Standard & Poor's B
Fitch Ratings(1)
B+
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(1)In May and July 2025, Moody's and Fitch, respectively, placed all of Qwest's ratings on review for a potential upgrade.
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. We cannot provide any assurances that we will be able to borrow additional funds on favorable terms, or at all. See Risk Factors-Financial Risks in Item 1A of Part I of our Annual Report on Form 10-K for the year ended December 31, 2024.
From time to time over the past couple of years, we and our affiliates have engaged in various debt refinancings, redemptions, tender offers, exchange offers, open market purchases and other transactions designed principally to reduce our consolidated indebtedness, extend our debt maturities, lower our interest costs, improve our financial flexibility, or otherwise enhance our debt profile. Subject to market conditions, restrictions under our debt covenants, and other limitations, we expect to opportunistically pursue similar transactions in the future to the extent feasible. See Note 5-Long-Term Debt for additional information.
Note Receivable - Affiliate
On March 31, 2025, we entered into an unsecured revolving promissory note with our ultimate parent Lumen Technologies, under which Lumen Technologies is permitted to borrow up to $3.0 billion from us at an 8.3% interest rate per annum. The principal amount is payable upon demand by us and prepayable by Lumen Technologies at any time, but no later than March 31, 2030, which will automatically renew on the maturity date for successive 12-month periods unless we elect otherwise. The facility has covenants and is subject to other limitations. As of September 30, 2025, we had $937 million due from Lumen Technologies under this promissory note. For more information, see Note 8-Affiliate Transactions.
Note Payable - Affiliate
We are permitted to borrow up to $2.0 billion from our parent Lumen Technologies under a revolving promissory note. As of September 30, 2025, no amount was due to Lumen Technologies under this promissory note.
Dividends
We periodically pay dividends to QSC, our direct parent company, which reduce our capital resources for debt repayments and other purposes. For additional information, see Note 17-Stockholder's Equity in Item 8 of Part II of our Annual Report on Form 10-K for the year ended December 31, 2024.
Pension and Post-retirement Benefit Obligations
Lumen Technologies is subject to material obligations under its existing defined benefit pension plans and post-retirement benefit plans. At December 31, 2024, the accounting unfunded status of Lumen's qualified and non-qualified defined benefit pension plans and qualified post-retirement benefit plans was approximately $645 million and approximately $1.7 billion, respectively. For additional information about Lumen's pension and post-retirement benefit arrangements, see "Critical Accounting Policies and Estimates-Pension and Post-Retirement Benefit Obligations" in Item 7 of Lumen's Annual Report on Form 10-K for the year ended December 31, 2024 and see Note 10-Employee Benefits to the consolidated financial statements in Item 8 of Part II of the same report.
A substantial portion of our active and retired employees participate in Lumen's qualified pension plan and post-retirement benefit plans. On December 31, 2014, the Qwest Communications International Inc. ("QCII") pension plan and a pension plan of an affiliate were merged into the CenturyLink Retirement Plan, which is now named the Lumen Combined Pension Plan. Our contributions are not segregated or restricted to pay amounts due to our employees and may be used to provide benefits to other employees of our affiliates. Prior to the pension plan merger, the above-noted employees participated in the QCII pension plan.
Benefits paid by Lumen's qualified pension plan are paid through a trust that holds all of the plan's assets. Based on current laws and circumstances, Lumen Technologies does not expect any contributions to be required for their qualified pension plan during 2025. The amount of required contributions to Lumen's qualified pension plan in 2026 and beyond will depend on a variety of factors, most of which are beyond Lumen's control, including earnings on plan investments, prevailing interest rates, demographic experience, changes in plan benefits and changes in funding laws and regulations. Lumen Technologies occasionally makes voluntary contributions in addition to required contributions and reserves the right to do so in the future. Lumen Technologies has advised that it does not expect to make a voluntary contribution to the trust of the qualified pension plan in 2025.
Substantially all of Lumen's post-retirement health care and life insurance benefits plans are unfunded and are paid by Lumen Technologies with available cash.
The affiliate obligations, net in Other current liabilities and Other liabilities on our consolidated balance sheets primarily represents the cumulative allocation of expenses, net of payments, associated with QCII's pension plans and post-retirement benefits plans prior to the plan mergers. In 2015, we agreed to a plan to settle the outstanding pension and post-retirement affiliate obligations, net balance with QCII over a 30 year term. Under the plan, payments are scheduled to be made on a monthly basis. For the three and nine months ended September 30, 2025, we made net settlement payments of $12 million and $36 million, respectively, to QCII in accordance with the plan. Changes in the affiliate obligations, net are reflected in operating activities on our consolidated statements of cash flows. For the year ended 2025, we expect to make aggregate settlement payments of $48 million to QCII under the plan.
For 2025, Lumen's expected annual long-term rate of return on pension plan assets is 6.5%. However, actual returns could be substantially different.
For additional information, see "Risk Factors-Financial Risks" in Item 1A of Part I of our Annual Report on Form 10-K for the year ended December 31, 2024.
Future Contractual Obligations
For information regarding our estimated future contractual obligations, see the MD&A discussion included in Item 7 of Part II of our Annual Report on Form 10-K for the year ended December 31, 2024.
Federal Broadband Support Programs
The FCC's RDOF program aims to support broadband expansion in rural areas throughout America. Although we initially agreed to participate in the program in certain areas, as previously disclosed, we voluntarily relinquished a portion of our RDOF awards in the third quarter of 2024. In the second quarter of 2025, we voluntarily relinquished the remainder of our RDOF awards. As a result, we will no longer receive funding through the RDOF program and recognized a reduction to revenue of $11 million in our consolidated statements of operations in the second quarter of 2025. We will also incur fees in connection therewith. These fees are currently estimated to be $12 million and are reflected in our operating expenses within our consolidated statements of operations. We expect to remit the $23 million of revenue and fees summarized above, along with an additional $3 million relating to our 2024 relinquishment, in the first half of 2026.
For additional information on these programs, see the following sections within Lumen's Annual Report on Form 10-K for the year ended December 31, 2024: (i) Note 3-Revenue Recognition to our consolidated financial statements in Item 8 of Part II, (ii) "Business-Regulation of Our Business-Universal Service" in Item 1 of Part I, and (iii) "Risk Factors-Legal and Regulatory Risks" in Item 1A of Part I. Additionally, refer to the quarterly reports filed by Lumen Technologies.
Cash Flow Activities
The following table summarizes our consolidated cash flow activities for the nine months ended September 30, 2025 and September 30, 2024:
Nine Months Ended September 30,
2025 2024
$ Change
(Dollars in millions)
Net cash provided by operating activities $ 1,360 1,646 (286)
Net cash used in investing activities (1,114) (1,346) (232)
Net cash used in financing activities (237) (288) (51)
Operating Activities
Net cash provided by operating activities decreased by $286 million for the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024 primarily due to lower net income adjusted for non-cash income and expenses. Cash provided by operating activities is subject to variability period over period as a result of timing differences, including with respect to collection of receivables and payments of interest expense, accounts payable and bonuses. For additional information about our operating results, see "Results of Operations" above.
Investing Activities
Net cash used in investing activities decreased by $232 million for the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024 due to (i) a decrease in advances to affiliates and (ii) a decrease in capital expenditures, partially offset by the issuance of a note receivable - affiliate.
Financing Activities
Net cash used in financing activities decreased by $51 million for the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024 due to a decrease resulting from the timing of repayments of advances from affiliates, partially offset by higher repayments of debt in 2025 as compared to 2024.
Other Matters
We are subject to various legal proceedings and other contingent liabilities that individually or in the aggregate could materially affect our financial condition, future results of operations or cash flows. See Note 9-Commitments, Contingencies and Other Items for additional information.
Our network includes some residual lead-sheathed copper cables installed years ago that constitute a small portion of our network. Recent media coverage of potential health and environmental risks associated with these cables has resulted in regulatory inquiries and lawsuits, and could subject us to legislative or regulatory actions, removal costs, compliance costs, or penalties. As of September 30, 2025, we have not accrued for any such potential costs and will only accrue when such costs are probable and reasonably estimable. For additional information about related litigation and potential risks, see Note 9-Commitments, Contingencies and Other Items to our consolidated financial statements in Item 1 of Part I of this report, and the risk factor disclosures referenced under "Risk Factors" in Item 1A of Part I of our Annual Report on Form 10-K for the year ended December 31, 2024.
Lumen Technologies is involved in several legal proceedings to which we are not a party that, if resolved against it, could have a material adverse effect on its business and financial condition. As a wholly owned subsidiary of Lumen Technologies, our business and financial condition could be similarly affected. You can find descriptions of these legal proceedings in Lumen's quarterly and annual reports filed with the SEC. Because we are not a party to any of the matters, we have not accrued any liabilities for these matters as of September 30, 2025.
Other Information
Lumen's and our website is www.lumen.com. We routinely post important investor information in the "Investors" section of our website at ir.lumen.com. The information contained on, or that may be accessed through, our website is not part of this quarterly report. You may obtain free electronic copies of annual reports on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K filed by us or our ultimate controlling stockholder Lumen Technologies, Inc., and all amendments to those reports, in the "Investor Relations" section of our website (ir.lumen.com) under the heading "SEC Filings." These reports are available on our website as soon as reasonably practicable after they are electronically filed with the SEC.
Qwest Corporation published this content on October 30, 2025, and is solely responsible for the information contained herein. Distributed via Edgar on October 30, 2025 at 20:27 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]