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What changed in Lumen Technologies, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Lumen Technologies, Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+511 added−646 removedSource: 10-K (2026-02-20) vs 10-K (2025-02-20)

Top changes in Lumen Technologies, Inc.'s 2025 10-K

511 paragraphs added · 646 removed · 294 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

81 edited+48 added−73 removed8 unchanged
Biggest changeAt December 31, 2024, approximately 4.2 million of our 22.0 million Mass Markets broadband-enabled units were capable of receiving services from our fiber-based infrastructure, with the remainder connected with copper-based infrastructure. Our domestic network also included at such date central office and other equipment that enables us to provide telephone service as an ILEC.
Biggest changeWe also maintain copper-based network infrastructure and multiple gateway and transmission facilities used to operate our network across North America. 11 Table o f Contents As of December 31, 2025, our domestic network: • connected to approximately 163,000 buildings, which we refer to as “fiber on-net” buildings, located in 226 metropolitan markets serving our enterprise customer base; • connected to approximately 22.0 million broadband-enabled units capable of receiving our Mass Markets broadband services across 17 states; • connected to approximately 4.6 million of our 22.0 million Mass Markets broadband-enabled units capable of receiving services from our fiber-based infrastructure, with the remainder connected to the copper-based infrastructure; and • included central office infrastructure and supporting equipment that enables us to provide telephone service as an ILEC.
Our comprehensive business continuity program focuses on prevention, collaboration, communication, response and recovery to assist us in quickly resolving disruptive events.
Our business continuity program focuses on prevention, collaboration, communication, response and recovery to assist us in quickly resolving disruptive events.
We remain committed to exploring ways to reduce GHG emissions through our operational, customer and employee initiatives. • Water : Lumen uses the World Resource Institute’s Aqueduct Water Risk Atlas to assess susceptibility to future water stress across our areas of operation. We strive to reduce our water consumption, especially in the water-stressed communities where we operate.
We remain focused on exploring ways to reduce GHG emissions through our operational, customer and employee initiatives. • Water : Lumen uses the World Resource Institute’s Aqueduct Water Risk Atlas to assess susceptibility to future water stress across our areas of operation. We strive to reduce our water consumption, especially in water-stressed communities where we operate.
Weather events such as severe flooding, wildfires and hurricanes can impact our ability to deliver services, so business resiliency and adaptability is key to the long-term viability of our business. • Occupational health and safety : We conduct risk assessments, review safety incident data and monitor health and safety legislation to develop policies and procedures designed to minimize safety hazards and support compliance with applicable laws and regulations.
Weather events such as severe flooding, wildfires and hurricanes can impact our ability to deliver services, so business resiliency and adaptability are key to the long-term success of our business. • Occupational health and safety : We conduct risk assessments, review safety incident data and monitor health and safety legislation to develop policies and procedures designed to minimize safety hazards and support compliance with applicable laws and regulations.
Private line service offers a high-speed, secure solution for frequent transmission of large amounts of data between sites, including wireless backhaul transmissions. • Other, which includes: ◦ Equipment. We sell and install certain communications equipment. ◦ Managed and Professional Service Solutions. We craft technology solutions for our customers and often manage these solutions on an ongoing basis.
Private line service offers a high-speed, secure solution for frequent transmission of large amounts of data between sites, including wireless backhaul transmissions. • Other : Includes various other products and services, including: ◦ Equipment : We sell and install certain communications equipment; ◦ Managed and Professional Service Solutions : We craft technology solutions for our customers and often manage these solutions on an ongoing basis.
To attain this goal, we strive to, among other things: • deliver best in class infrastructure to meet network, transport, data, and computing needs; • optimize and innovate the way locations, data centers, and clouds connect; • limit, detect, and mitigate network and data security vulnerabilities; • expand our product offerings and strengthen our digital self-service ordering platforms; • create a more adaptive and integrated network; • continue to monetize our network-related assets, principally through the sale of PCF solutions; • expand our network capacity through our AI backbone initiative; • execute on our Quantum Fiber buildout plan; • manage our non-core business for cash flow; and • strengthen our financial position and performance through our modernization and simplification initiatives, resulting in lower costs and debt reduction.
To attain this goal, we strive to, among other things: • deliver best in class physical infrastructure to meet network, transport, data, and computing needs; • optimize and innovate the way locations, data centers, and clouds connect; • limit, detect, and mitigate network and data security vulnerabilities; • expand our product offerings and strengthen our digital self-service ordering platforms; • create a more adaptive and integrated network; • continue to monetize our network-related assets, principally through the sale of PCF solutions; • expand our network capacity through our artificial intelligence ("AI") backbone initiative; • manage our non-core business for cash flow; and • strengthen our financial position and performance through our modernization and simplification initiatives, resulting in lower costs and debt reduction.
Our tools, technology and hands-on expertise provide the ability to design, deploy and evolve with business needs while maintaining complete visibility, security and control; 14 Table of Contents ◦ Unified Communications and Collaboration ("UC&C") . We provide access to various unified communications platforms.
Our tools, technology and hands-on expertise provide the ability to design, deploy and evolve with business needs while maintaining complete visibility, security and control; ◦ Unified Communications and Collaboration ("UC&C") : We provide access to various unified communications platforms.
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.
The FCC also regulates several aspects of our business related to international communications services, privacy, public safety, and network infrastructure, including: • our access to and use of telephone 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.
In most states, switched and business data services and interconnection services are subject to price regulation, although the extent of regulation varies by type of service and geographic region. State agencies also regulate certain aspects of non-ILEC communications businesses, including determining carriers’ eligibility to receive federal universal service fund support.
In some states, switched and business data services and interconnection services remain subject to price regulation, though the extent varies by service type and geographic region. State agencies also regulate certain aspects of non-ILEC communications businesses, including determining carrier eligibility for federal universal service fund support.
As a company providing global services, we must comply with various jurisdictional data privacy regulations, including the General Data Protection Regulation (“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.
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.
These services include Synchronous Optical Network (SONET) based ethernet, legacy data hosting services, and conferencing services. 15 Table of Contents At December 31, 2024, we reported our products and services revenue among the following categories for the Mass Markets segment: • Fiber Broadband , under which we provide high speed broadband services to residential and small business customers utilizing our fiber-based network infrastructure; • Other Broadband , under which we provide primarily lower speed broadband services to residential and small business customers utilizing our copper-based network infrastructure; and • Voice and Other, under which we derive revenues from (i) providing local and long-distance voice services, professional services, and other ancillary services, and (ii) federal broadband and state support programs.
Mass Markets Products and Services As of December 31, 2025, we reported our products and services revenue among the following three categories for the Mass Markets segment: • Fiber Broadband : Under which we provide high speed broadband services to residential and small business customers utilizing our fiber-based network infrastructure; • Other Broadband : Under which we provide primarily lower speed broadband services to residential and small business customers utilizing our copper-based network infrastructure; and • Voice and Other : Under which we derive revenues from (i) providing local and long-distance voice services, professional services, and other ancillary services, and (ii) federal broadband and state support programs.
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 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.
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. Additional Information From time to time, we may make investments in other communications or technology companies.
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.
Anti-Bribery and Corruption Regulations As a provider of global services, we must comply with complex foreign and U.S. laws and regulations governing business ethics and practices, such as the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act and other local laws prohibiting corrupt payments to governmental officials and anti-competition regulations.
Anti-Bribery and Corruption Regulations As a global service provider, we are subject to complex foreign and U.S. laws governing business ethics and practices, including the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act, and other local laws prohibiting corrupt payments to government officials, as well as anti-competition regulations.
We have adopted a written Code of Conduct that serves as the code of ethics applicable to our directors, officers and employees, in accordance with applicable laws and rules promulgated by the SEC and the New York Stock Exchange.
Governance We have adopted a written Code of Conduct that serves as our code of ethics applicable to our directors, officers, and employees, including our principal executive and financial officers, as required by the SEC and the New York Stock Exchange.
Our specific products and services are detailed below under the heading “Segments and Products & Services.” We conduct our operations under the following four brands: 5 Table of Contents • "Lumen," which is our flagship brand for serving the enterprise and wholesale markets, including our Private Connectivity Fabric SM ("PCF") network architecture, Lumen Digital products, and our priority services including Edge, Network-as-a-Service and cybersecurity; • "Quantum Fiber," which is our brand for providing fiber-based broadband services to residential and small business customers; • "CenturyLink," which is our long-standing brand for providing primarily mass-marketed copper-based communications services, which we manage for cash flow; and • "Black Lotus Labs," which is our cyberthreat research and intelligence arm.
Our Brands We conduct our operations under the following brands: • Lumen : Our flagship brand for serving the enterprise and wholesale markets, including our PCF network architecture, Lumen Digital products, and our priority services including Edge, Network-as-a-Service and cybersecurity; • CenturyLink : Our long-standing brand for providing primarily mass-marketed copper-based communications services, which we manage for cash flow; and • Black Lotus Labs : Our cyberthreat research and intelligence arm.
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. • Nurture, which includes our more mature offerings, such as: ◦ Ethernet. We deliver a robust array of networking services built on ethernet technology.
This offering includes both individual, license-based service models and more robust enterprise-wide options that transform a customer’s various communication tools into a single platform; and ◦ 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. • Nurture : Includes our more mature offerings, such as: ◦ Ethernet : We deliver a robust array of networking services built on ethernet technology.
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.
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.
We support our distribution through digital advertising, events, television advertising, website promotions and public relations. We 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 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.
Consequently, our ILECs face competition from competitive local exchange carriers ("CLECs"), which typically provide competing services through (i) reselling an ILEC’s local services, (ii) using an ILEC’s unbundled network elements, (iii) operating their own facilities, or (iv) a combination thereof.
Consequently, our ILECs face competition from competitive local exchange carriers (“CLECs”). These CLECs typically provide competing services through: • reselling an ILEC’s local services; • using an ILEC’s unbundled network elements; • operating their own facilities; or • utilizing hybrid approaches of the aforementioned.
ITEM 1. BUSINESS Business Overview and Purpose 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 a broad array of integrated products and services to our domestic and global Business customers and our domestic Mass Markets customers.
ITEM 1. BUSINESS Business Overview 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 customers.
At December 31, 2024, our network (owned and leased) included approximately 340,000 route miles of fiber optic plant, most of which consists of "long-haul" fiber connecting major metropolitan centers and the remainder of which is "metro" fiber that connects buildings within the metropolitan markets we serve.
Connectivity and Coverage As of December 31, 2025, our network included over 340,000 route miles of fiber optic plant, most of which consists of "long-haul" fiber connections between major metropolitan areas, with the remainder being "metro" fiber that connects buildings within the metropolitan markets we serve.
We offer Lumen-managed and co-managed SD-WAN solutions to help reduce the complexity and business risk of network transformation on a single, automated platform that coordinates the full spectrum of connectivity types.
These services include DDoS mitigation, remote and premise-based firewalls, professional consulting and management services, and threat intelligence services; ◦ Software-Defined Wide Area Networks ("SD WAN") : We offer Lumen-managed and co-managed SD-WAN solutions to help reduce the complexity and business risk of network transformation on a single, automated platform that coordinates the full spectrum of connectivity types.
Research, Development & Intellectual Property As of December 31, 2024, we held approximately 2,400 patents and patent applications in the U.S. and other countries. We have also received licenses to use patents held by others.
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 2,500 patents and patent applications in the U.S. and other countries. We have also received licenses to use patents held by others.
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, various state and federal agencies are continuing to take steps to make this funding available to eligible applicants. We believe that the release of this funding could increase competition for broadband customers.
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.
State regulatory commissions generally continue to (i) set the rates that telecommunications companies charge each other for exchanging traffic, (ii) exercise some control over the rates telecommunications companies charge their customers for regulated services, (iii) require ILECs to provide voice service throughout their territories, particularly in areas where alternative voice service is not available, (iv) administer support programs designed to subsidize the provision of services to high-cost rural areas, (v) regulate the purchase and sale of ILECs, (vi) require ILECs to provide service under publicly-filed tariffs setting forth the terms, conditions and prices of regulated services, (vii) limit ILECs’ ability to borrow and pledge their assets, (viii) regulate transactions between ILECs and their affiliates and (ix) impose various other service standards.
While most states have reduced regulation, state regulatory commissions generally continue to: • set rates for traffic exchanged between telecommunications companies; • exercise some control over rates charged to customers for regulated services; • require ILECs to provide voice service throughout their territories, especially where alternative voice services are unavailable; • administer support programs subsidizing service in high-cost rural areas; 16 Table o f Contents • regulate the purchase and sale of ILECs; • require ILECs to provide service under publicly-filed tariffs outlining terms, conditions, and prices of regulated services; • regulate ILECs’ ability to borrow and pledge their assets; • regulate transactions between ILECs and their affiliates; and • impose various other service standards.
Data Privacy Laws and Regulations Various foreign, federal and state laws govern our storage, maintenance and use of customer data, including a wide range of consumer protection, data protection, privacy, intellectual property and similar laws. Data privacy regulations are complex and vary across jurisdictions.
Data Privacy Laws and Regulations We are subject to numerous foreign, federal, and state laws governing the storage, maintenance, and use of customer data, including consumer protection, data protection, privacy, intellectual property, and other similar laws. These requirements are complex and vary widely across jurisdictions.
Our contingent liabilities under these laws are further described in Note 18—Commitments, Contingencies and Other Items. 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 operations or that require us to obtain permits, licenses or franchises to operate.
Our contingent liabilities under these laws are further described in Note 17 — Commitments, Contingencies and Other Items in Item 8. Certain federal and state agencies, including attorneys general, monitor and exercise oversight related to consumer protection issues.
We encourage customers to return to us their equipment, which is then either reused or sent to a certified recycler. This and other programs enable us to divert electronic and communications equipment from landfills. • Supplier environmental assessment : We expect our suppliers to embrace and share our commitment to compliance and sustainability efforts.
This and other programs enable us to divert electronic and communications equipment from landfills. • Supplier environmental assessment : We expect our suppliers to embrace and share our focus on compliance and sustainability efforts.
We have compliance policies, programs and training designed to prevent non-compliance with such anti-corruption regulations in the U.S. and other jurisdictions. Regulation of International Operations Our subsidiaries operating outside of the U.S. are subject to various regulations in the markets where service is provided. The scope of regulation varies from country to country.
To mitigate risk, we maintain compliance policies, programs, and training designed to prevent non-compliance with these anti-corruption and fair competition laws across 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 we provide services.
Positive Corporate Culture At Lumen, we are focused on transforming our business and delivering results for our colleagues, customers, partners, and shareholders. Our employees are critical to Lumen's success and we believe creating a winning culture and teams with different skills, perspectives, experiences, and backgrounds is essential to attracting and retaining engaged employees.
Positive Corporate Culture At Lumen, our goal is to transform our business and deliver value to colleagues, customers, partners, and shareholders. Our employees are the foundation of Lumen's success, and we believe that fostering a winning culture built on diverse skills, perspectives, and experiences, is essential to attracting and retaining engaged talent.
Although we 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. 11 Table of Contents As a critical infrastructure provider, we and our customers are a constant target of cyber-attacks from a wide range of intruders, including advanced persistent threat actors.
Leased Network Assets Although we 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.
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. 18 Table of Contents Other Regulations Our networks and properties are subject to numerous federal, state and local laws and regulations, including laws and regulations governing the use, storage and disposal of hazardous materials, the release of pollutants into the environment and the remediation of contamination.
Other Regulations Our networks and properties are subject to numerous federal, state, and local laws and regulations, including those governing the use, storage, and disposal of hazardous materials, the release of pollutants into the environment, and the remediation of contamination.
We offer our customers a complete portfolio of traditional Time Division Multiplexing voice services including primary rate interface service, local inbound service, switched one-plus, toll free, long distance and international services; and ◦ Private Line. We deliver private line services, a direct circuit or channel specifically dedicated for connecting two or more organizational sites.
These technologies enable enterprises, government entities and service providers to streamline multiple networks into a cost-effective solution that simplifies the transmission of voice, video, and data over a single secure network. 10 Table o f Contents • 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 interface service, local inbound service, switched one-plus, toll free, long distance and international services; and ◦ Private Line : We deliver private line services, a direct circuit or channel specifically dedicated for connecting two or more organizational sites.
We continue to evaluate the possibility of acquiring additional assets or divesting assets in exchange for cash, securities or other properties, and at any given time may be engaged in discussions or negotiations regarding additional acquisitions or divestitures. We generally do not announce our acquisitions or divestitures until we have entered into a preliminary or definitive agreement.
See Note 2 — Divestitures in Item 8 for additional information on these transactions. We continue to evaluate the possibility of acquiring or divesting assets in exchange for cash, securities or other properties, and at any given time may be engaged in discussions or negotiations regarding such possibilities.
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 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.
We compete to provide services to Business customers based on a variety of factors, including the comprehensiveness and reliability of our network, our data transmission 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.
Business Enterprise and Wholesale Customers We compete for enterprise and wholesale 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.
We anticipate that all these trends will continue to decrease use of our voice network. 12 Table of Contents We continue to operate various ILECs, which are obligated under federal law to permit competitors to interconnect their facilities to the ILEC’s network and to take various other steps that are designed to promote competition, including obligations to (i) negotiate interconnection agreements in good faith, (ii) provide nondiscriminatory “unbundled” access to specific portions of the ILEC’s network and (iii) permit competitors to physically or virtually collocate their plant on the ILEC’s property.
Incumbent Local Exchange Carriers ("ILECs") We operate various ILECs that are required under federal law to allow competitors to interconnect their facilities to the ILEC's network and to take other various steps designed to promote competition, including: • negotiating interconnection agreements in good faith; • providing nondiscriminatory “unbundled” access to portions of the ILEC’s network; and • permitting competitors to collocate facilities on the ILEC’s property either physically or virtually.
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 ◦ VPN Data Networks.
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.
We continuously monitor safety performance to identify trends and evaluate opportunities to eliminate or reduce the risks of workplace hazards. Our Network Our network, through which we provide most of our products and services, consists of fiber-optic and copper cables, high-speed transport equipment, electronics, voice switches, data switches, routers, and various other equipment.
From time to time, we may change the categorization of our products and services. Our Network We deliver most of our products and services through our network consisting of fiber-optic and copper cables, high-speed transport equipment, electronics, voice and data switches, routers, and various other equipment.
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 of the Latin American, ILEC 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.
We sold portions of our network during 2023 and 2022 and recently completed an additional sale on February 2, 2026, as described above and discussed further in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7 and Note 2 — Divestitures in Item 8.
Website Access and Important Investor Information We were incorporated in Louisiana in 1968. Our website is www.lumen.com . We routinely post important investor information in the “Investor Relations” section of our website at ir.lumen.com .
Website Access and Important Investor Information Our website is www.lumen.com, and we routinely post important investor information in the “Investor” section of our website at ir.lumen.com . Our principal executive offices and telephone number are listed on the cover page of this report.
We could incur substantial penalties if we fail to comply with the FCC’s applicable regulations. 16 Table of Contents Many of the FCC’s regulations adopted in recent years remain subject to judicial review and additional rule-makings, thus increasing the difficulty of determining the ultimate impact of these changes on us and our competitors.
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.
With approximately 163,000 fiber on-net buildings and 340,000 route miles of fiber optic cable globally, we are among the largest providers of communications services to domestic and global enterprise customers. Our terrestrial fiber optic long-haul network throughout North America and Asia Pacific connects to metropolitan fiber networks that we operate.
Prior to our Mass Markets Fiber-to-the-Home divestiture, we operated our fiber-based broadband services to residential and small business customers under Quantum Fiber. Our Network With approximately 163,000 fiber on-net buildings and over 340,000 route miles of fiber optic cable globally as of December 31, 2025, we are among the largest providers of communications services to domestic and global enterprise customers.
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.
Our non-domestic operations are regulated by supranational groups such as the European Union ("EU"), national agencies and frequently state, provincial, or local bodies. In most areas where we offer regulated services, we must obtain and maintain operating licenses from these bodies.
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. Our fiber network spans approximately 340,000 route miles globally with extensive off-net access solutions across North America and Asia Pacific; ◦ Communications (Voice over IP, "VoIP").
Our fiber network spans over 340,000 route miles globally with extensive off-net access solutions across North America and Asia Pacific; ◦ Communications (Voice over IP, "VoIP") : We offer a VoIP portfolio, including session initiation protocol ("SIP") trunking, and our Cloud Voice Solution, which combines hosted voice, SIP trunking, and branded collaboration.
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 18—Commitments, Contingencies and Other Items to our consolidated financial statements in Item 8 of Part II of this report.
For information on various litigation risks associated with owning and using intellectual property rights, see “Risk Factors — Business Risks” in Item 1A and Note 17 — Commitments, Contingencies and Other Items in Item 8. 14 Table o f Contents Regulation of Our Business Our domestic operations are regulated by the Federal Communications Commission (the "FCC"), state regulatory commissions, and occasionally local agencies.
You may obtain free electronic copies of our annual reports on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K (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.sec.gov .
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.
For additional information about these programs, see (i) Note 4—Revenue Recognition to our consolidated financial statements in Item 8 of Part II of this report and (ii) "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 these programs, see "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Item 7 and Note 4 — Revenue Recognition in Item 8. Broadband Regulation The regulatory environment for broadband internet access service (“BIAS”) has shifted significantly in recent years, creating uncertainty about future requirements.
The Code of Conduct, as well as various other governance documents, are also available in the “Governance” section of our website at www.lumen.com/en-us/about/governance or in print to any shareholder who requests them by sending a written request to our Corporate Secretary at Lumen Technologies, Inc., 100 CenturyLink Drive, Monroe, Louisiana, 71203.
The Code of Conduct, as well as various other governance documents, are available on our website under “Investors” → “Governance” → “Board of Directors” → “Resources” or in print to any shareholder who sends a written request to our Corporate Secretary at Lumen Technologies, Inc., 100 CenturyLink Drive, Monroe, Louisiana, 71203. 18 Table o f Contents 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.
Our Business customers range from small business offices to the world’s largest global enterprise customers. Our direct sales representatives generally market our business services to members of in-house IT departments or other highly-sophisticated customers with deep technological experience.
To meet the needs of diverse customers, we offer both stand-alone and bundled services, including our PCF solutions, designed to provide a complete offering of integrated services. Direct sales representatives generally market our business services to in-house IT departments or other highly-sophisticated customers with deep technological experience.
We recently announced early achievement of our 2018-2025 science-based GHG emissions-reduction targets and we are proud to have exceeded our targets ahead of schedule.
We recently announced achievement of our 2018-2025 science-based GHG emissions-reduction targets. To guide the next phase of our sustainability journey, we have set new science-based GHG emissions reduction targets and developed an Energy Efficiency and Innovation Plan.
Any references to our website in this report or any other periodic reports that we file with the SEC are provided for convenience only, and are not intended to make any of our website information a part of this or such other reports.
Information on our website is provided for convenience only and is not part of this or any other SEC filing.
We offer a VoIP portfolio, including session initiation protocol ("SIP") trunking, and our Cloud Voice Solution, which combines hosted voice, SIP trunking, and branded collaboration. Our Cloud Communications platform moves voice communications to the cloud for seamless communication, operational efficiency, and reliable, cost-effective support for critical safety systems; ◦ Managed Security Services.
Our Cloud Communications platform moves voice communications to the cloud for seamless communication, operational efficiency, and reliable, cost-effective support for critical safety systems; ◦ Managed Security Services : We provide enterprise security solutions that help our customers secure networks, mitigate malicious attacks, and identify potential security threats.
Our EHS program focuses on the following key areas: • Environmental compliance and management : The Lumen EHS team assesses and reviews our company programs, operational facilities and waste management vendors.
Environmental Sustainability Key Focus Areas include: • Environmental compliance and management : We assess and review our Company programs, operational facilities and waste management vendors.
In mid-2024, a federal appellate court ruled that the FCC's universal service funding system, which levied fees against us and other telecommunication companies, was unlawful. Due to pending judicial and legislative proceedings, it is unclear how this development may ultimately impact us.
In 2024, a federal appellate court ruled that the FCC's universal service funding system, which levied fees against us and other telecommunication companies, was unlawful. The Supreme Court reversed that ruling, but the parties challenging the USF program have filed a renewed challenge asserting additional arguments.
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 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.
The communications regulatory regimes in certain of our non-domestic markets are in the process of development and do not fully address many issues, including the pricing of services.
The scope and nature of these regulations vary by country and in some jurisdictions, communications regulatory frameworks are still developing and do not fully address many issues, including the pricing of services.
Products & Services At December 31, 2024, we categorized our products and services revenue among the following product categories for the Business segment: • Grow, which includes products and services that we anticipate will grow, including: ◦ Dark Fiber and Conduit.
Products and Services Business Products and Services As of December 31, 2025, we categorized our products and services revenue among the following four product categories for the Business segment: • Grow : Includes products and services that we anticipate will grow, including: 9 Table o f Contents ◦ 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.
In 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.
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.
Depending on the applicable market and services, competition can be intense, especially if competitors in the market have network assets better suited to customer needs, faster transmission speeds, lower prices, or a longer history of providing service in the market.
Competitive pressures are particularly strong when rivals have network assets better suited to customer needs, faster transmission speeds, lower prices, or a longer track record in the market.
We operate part of our network with leased assets, and a substantial portion of our equipment with licensed software.
Portions of our network use leased assets, and much of the equipment uses licensed software.
Federal Regulation of Domestic Operations General The FCC regulates the interstate services we provide, including the business data service charges we bill for wholesale network transmission and intercarrier compensation, including the interstate access charges that we bill other communications companies in connection with the origination and termination of interstate phone calls.
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.
As further discussed immediately below under the heading “Acquisitions and Divestitures,” we sold (i) both our Latin American business and a portion of our incumbent local exchange carrier ("ILEC") business during 2022 and (ii) our business conducted in Europe, the Middle East and Africa ("EMEA") during 2023.
Key divestitures include: • divested Latin American business and a portion of our incumbent local exchange carrier ("ILEC") business primarily conducted in 20 states in 2022; • divested our Europe, the Middle East and Africa ("EMEA") business in 2023; and • Subsequent event — February 2, 2026: divested our Mass Markets Fiber-to-the-Home business in the Territory to AT&T.
For additional information regarding risks relating 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. Competition We compete in a dynamic and highly competitive market in which demand for high-speed, secure data services continues to grow.
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.
Labor Relations At December 31, 2024, approximately 21% of our U.S. workforce was represented by a union (either the Communications Workers of America or the International Brotherhood of Electrical Workers). A small number of our overseas employees are represented by unions or another representative body.
By prioritizing well-being, we strengthen our culture, improve job satisfaction, and support recruiting and retention — helping every employee reach their full potential. Labor Relations As of December 31, 2025, approximately 20% of our U.S. workforce was represented by a union, either the Communications Workers of America or the International Brotherhood of Electrical Workers.
We track our usage, monitor trends, and implement measures to enhance efficiency and reduce discharge. 10 Table of Contents • Waste : We are committed to reusing and recycling products, carefully managing our waste and minimizing material use throughout our operations.
We track our usage, monitor trends, and implement measures to enhance efficiency and reduce discharge. • Waste : We aim to reuse and recycle products, carefully manage our waste and minimize material use throughout our operations. We encourage customers to return their equipment to us, which is then either reused or sent to a certified recycler.
We invest in broad-based development for our employees in various ways such as skills-building programs, on-demand learning options, tuition reimbursement and tailored intern and mentoring programs, along with a suite of leadership development courses. 8 Table of Contents We have increased our focus on fostering internal mobility and providing more visibility and career advancement opportunities to our workforce through our internal communications platforms.
These initiatives empower employees to pursue their professional goals while strengthening engagement and retention. We invest in broad-based development through: • skills-building programs and on-demand learning options; • tuition reimbursement; • tailored internship and mentoring programs; and • a suite of leadership development courses.
Attracting, Developing and Retaining Talent Our recruiting, development and retention objectives focus on treating talent as a differentiator and a leading indicator of business performance. We strive to hire and retain the best talent available to provide outstanding opportunities for career advancement and to champion fair selections and best hiring practices.
Attracting, Developing and Retaining Talent We view talent as a key differentiator and a leading indicator of performance. Our goal is to hire and retain top talent, provide exceptional opportunities for career growth, and uphold fair, transparent hiring practices. To achieve this, we’ve implemented a rigorous hiring process supported by competency-based success profiles and ongoing career development programs.
Partners and Vendors We leverage a digital ecosystem of trusted partners to help us innovate and grow. We seek to engage with those partners and vendors who best contribute to our customers’ success. Lumen seeks to co-innovate with a comprehensive group of strategic partners to create solutions focused on our customers' business and IT requirements.
Partners and Vendors We leverage a digital connected ecosystem of trusted partners to help us innovate and grow. This ecosystem expands how we design, deliver, and scale solutions to best support our customers' success as the trusted network for AI.
Changes in the composition and leadership of these agencies are often difficult to predict, which makes future planning more difficult. The following description discusses some of the major regulations affecting our operations, but others could have a substantial impact on us as well. For additional information, see “Risk Factors” in Item 1A of Part I of this report.
Changes in the leadership or structure of these regulatory bodies can significantly affect our revenue, expenses, competitive position or prospects. Because such changes are often difficult to predict, long-term planning is challenging. This section highlights certain regulations affecting our operations, though additional regulations could have a significant impact. For additional information, see “Risk Factors” in Item 1A.
These individuals typically satisfy their IT requirements by contracting with us or a rapidly evolving group of competitors, or by deploying in-house solutions. We also market our products and services through inbound call centers, telemarketing and third parties, including telecommunications agents, system integrators, value-added resellers and other telecommunications firms.
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.
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. Seasonality Overall, our business is not materially impacted by seasonality.
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.
Competition to provide broadband services to our Mass Markets customers remains high. Market demand for our broadband services could be adversely affected by (i) advanced wireless data transmission technologies, including fixed wireless and low-earth-orbit satellite services, and (ii) continued enhancements to cable-based services, each of which generally provides faster average broadband transmission speeds than our copper-based infrastructure.
Market demand for our broadband services could be adversely affected by: • advanced wireless data transmission technologies (e.g., fixed wireless and low-earth-orbit satellites services); • continued enhancements to cable-based services; and 13 Table o f Contents • newly established fiber-based networks built by competitors or municipalities, often supported by government subsidies.
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. 17 Table of Contents State Regulation of Domestic Operations Historically ILECs, including ours, have been regulated as “common carriers,” and state regulatory commissions have generally exercised jurisdiction over intrastate voice telecommunications services and their associated facilities.
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.
We expect continued intense competition from a wide variety of sources under these evolving market conditions. In addition to competition from large international communications providers, we are facing competition from a growing number of sources, including systems integrators, hyperscalers, cloud service providers, software networking companies, infrastructure companies, cable companies, wireless service providers, device providers, resellers and smaller niche providers.
Competition We compete in a dynamic and highly competitive market where demand for high-speed, secure data services continues to grow. Our competitors include global communications providers as well as systems integrators, hyperscalers, cloud service providers, software networking companies, infrastructure companies, cable companies, wireless service providers, device providers, resellers, and smaller niche providers.
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 technological and industry changes.
Intense competition is expected to continue across a wide range of industry participants amid the evolving market landscape. 12 Table o f Contents Our Success Our ability to compete and succeed in this competitive environment depends on: • enhancing and integrating existing products; • introducing new offerings quickly and cost-effectively; • meeting changing customer needs; • delivering robust information security to build trust and mitigate cyber threats; • extending our core technologies into new applications; and • anticipating industry and technology shifts.
Lumen’s highly competitive business requires attracting, developing and retaining a motivated team inspired by leadership, engaged in meaningful work, motivated by career growth opportunities and thriving in a culture where teamwork, trust, and transparency drive both individual and collective success. Understanding and anticipating the priorities of our current and future employees is important to our future success.
Employees and Human Capital Resources To drive growth and success, we’ve strengthened our senior 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.
Understanding how each customer accesses and uses our products and services informs the type of customer engagement to best meet their expectations. Our commitment to staying abreast of our customers’ needs is evident in our Customer Advisory Board, a forum where some of our largest customers gather twice a year to discuss emerging technology trends.
Our commitment to staying abreast of our customers’ needs is evident through our: • Lumen Advisory Board : A forum where our major customers meet twice a year to discuss emerging technology trends and shape strategy. • Lumen Customer Community : An interactive online platform designed exclusively for Lumen customers to connect with each other and access valuable resources. • Annual customer experience event : A collaborative platform where customers and Lumen engage directly to share feedback, explore emerging technologies, and co-create solutions for the future.
We support this culture of growth through a robust learning ecosystem, offering approximately 8,900 courses within our learning management system, the majority of which are Lumen-specific content, and a vast library of over 150,000 resources on our learning platform. Developing strong leaders who can move our company forward is a priority for Lumen.
We also prioritize internal mobility and career visibility and advancement opportunities through enhanced communication platforms and a robust learning ecosystem. We support this culture of growth through a robust learning ecosystem, offering approximately 160,000 courses within our learning management system, including around 8,000 Lumen-specific courses, ensuring employees have the tools to grow and succeed.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWe face other financial risks, including among others the risk that: • downgrades in our credit ratings or unfavorable financial analyst reports regarding us or our industry could adversely impact the liquidity or market prices of our outstanding debt or equity 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 States, various foreign countries and supranational or international organizations to reform taxes or identify new tax sources could materially impact our taxes, or 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.
Biggest changeWe face other financial risks, including among others the risk that: • future intangible asset impairments could result in significant non-cash charges, reducing earnings and stockholders’ (deficit) equity and adversely affecting our financial 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 or our industry could adversely impact the liquidity or market prices of our outstanding debt or equity 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 U.S.
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, political instability or other factors, could negatively affect our business or operations in a variety of ways.
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.
These provisions (which are described further in our Registration Statement on Form 8-A/A filed with the SEC on March 2, 2015) could deprive our shareholders of any related takeover premium. 35 Table of Contents ITEM 1B. UNRESOLVED STAFF COMMENTS None.
These provisions (which are described further in our Registration Statement on Form 8-A/A filed with the SEC on March 2, 2015) could deprive our shareholders of any related takeover premium. 34 Table o f Contents ITEM 1B. UNRESOLVED STAFF COMMENTS None.
In addition to these international regulatory risks, some of the other risks inherent in conducting business internationally include: 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.
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.
Under our consolidated debt and financing arrangements, the issuer of the debt is subject to various covenants and restrictions, the most restrictive of which pertain to the debt of Lumen Technologies, Inc. and Level 3 Financing, Inc.
Under our consolidated debt and financing arrangements, the issuer of the debt is subject to various covenants and restrictions, with the most restrictive applying to Lumen Technologies, Inc. and Level 3 Financing, Inc.
As of such date, our domestic pension plans and our other domestic post-retirement benefit plans were substantially underfunded from an accounting standpoint. We also maintain benefit plans for a much smaller base of our non-U.S. employees. The cost to fund the pension and healthcare benefit plans for our active and retired employees has a significant impact on our profitability.
Currently, our domestic pension plans and other domestic post-retirement benefit plans are substantially underfunded from an accounting standpoint. We also maintain benefit plans for a much smaller base of our non-U.S. employees. The cost to fund these pension and healthcare benefit plans for our active and retired employees has a significant impact on our profitability.
A number of provisions in our organizational documents and various provisions of applicable law or our Section 382 rights agreement may delay, defer or prevent a future takeover of us unless the takeover is approved by our Board of Directors.
Our agreements, organizational documents, and applicable law could restrict another party’s ability to acquire us. A number of provisions in our organizational documents and various provisions of applicable law or our Section 382 Rights Agreement may delay, defer or prevent a future takeover of us unless the takeover is approved by our Board of Directors.
Our costs of maintaining our pension and healthcare plans, and the future funding requirements for these plans, are affected by several factors, including investment returns on funds held by our applicable plan trusts; changes in prevailing interest rates and discount rates or other factors used to calculate the funding status of our plans; increases in healthcare costs generally or claims submitted under our healthcare plans specifically; the longevity and payment elections of our plan participants; changes in plan benefits; and the impact of the continuing implementation and modification of current federal healthcare and pension funding laws and regulations promulgated thereunder.
Our costs of maintaining these plans, and the future funding requirements, are affected by several factors, including: • investment returns on funds held by our applicable plan trusts; • changes in prevailing interest rates and discount rates or other factors used to calculate the funding status of our plans; • increases in healthcare costs generally or claims submitted under our healthcare plans specifically; • the longevity and payment elections of our plan participants; • changes in plan benefits; and • the impact of the continuing implementation and modification of current federal healthcare and pension funding laws and related regulations. 31 Table o f Contents Increased costs under these plans could reduce our profitability and increase our funding commitments to our pension plans.
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.
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 implement to protect infrastructure and maintain operations may prove inadequate to sustain our operations following such events.
Our international operations expose us to various regulatory, currency, tax, legal and other risks. 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.
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.
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 GAAP.
We maintain disclosure controls and procedures designed to provide reasonable assurances regarding the accuracy and completeness of our SEC reports and internal control over financial reporting designed to provide reasonable assurance regarding the reliability of our financial statements and their compliance with GAAP. We cannot assure you these measures will be effective.
These restrictive covenants could have a material adverse impact on our ability to operate or reconfigure our business, to issue additional priority debt, to pursue acquisitions, divestitures or strategic transactions, or to otherwise pursue our plans and strategies.
These restrictive covenants could have a material adverse impact on our ability to operate or reconfigure our business, to issue additional priority debt, to pursue acquisitions, divestitures or strategic transactions, or to otherwise pursue our plans and strategies. We cannot assure you that we will be able to comply with these covenants.
For each of these reasons, any of the proceedings described in Note 18—Commitments, Contingencies and Other Items, as well as current litigation not described therein or future litigation, could have a material adverse effect on our business, reputation, financial position, operating results, the trading price of our securities and our ability to access the capital markets.
Any of the proceedings described in Note 17 — Commitments, Contingencies and Other Items in Item 8, as well as other current or future litigation, could have a material adverse effect on our business, reputation, financial position, operating results, the market price of our securities, and our ability to access capital.
As a result, we rely upon our subsidiaries to generate cash flows in amounts sufficient to fund our obligations, including the payment of our long-term debt. Our subsidiaries are separate and distinct legal entities and have no obligation to pay any amounts owed by us, except to the extent they have guaranteed such payments.
As a result, we rely upon our subsidiaries to generate cash flows in amounts sufficient to fund our obligations, including the payment of our long-term debt. Our subsidiaries are separate and distinct legal entities and, except where they have provided guarantees, have no obligation to pay amounts owed by us or to make funds available for our use.
In an effort to safeguard our NOLs, we have maintained an NOL rights agreement which is scheduled to lapse in late 2026. At December 31, 2024, we also had state NOLs which we believe are subject to legal and practical limitations on our ability to realize their full benefit.
In an effort to safeguard our NOLs, we have maintained a Section 382 Rights Agreement (discussed in more detail below) which is scheduled to lapse in late 2026. Our state NOLs are subject to legal and practical limitations on our ability to realize their full benefit.
Such damage to our reputation could be difficult, expensive and time-consuming to repair, and could negatively impact our business or the value of our securities. 29 Table of Contents Financial Risks Our significant debt levels expose us to a broad range of risks.
Reputational harm may be difficult, costly, and time-consuming to repair and could negatively affect our business and the value of our securities. 28 Table o f Contents Financial Risks Our significant debt levels expose us to a broad range of risks.
From time to time in the ordinary course of our business, we experience outages in our network, hosting, cloud or IT platforms, or failures of our products or services (including basic and enhanced 911 emergency services) to perform in the manner anticipated.
Network, platform, or service failures could materially impact us. From time to time, we experience outages in our network, hosting, cloud, or IT platforms, or failures of our products and services — including basic and enhanced 911 emergency services — to perform as intended.
These disruptions expose us to several of the same risks listed above for cyber-attacks, including the loss of customers, the issuance of credits or refunds, and regulatory fines.
These disruptions expose us to many of the same risks described above for cyber-attacks and may lead to lost revenue, issuance of customer credits or refunds, complete customer loss, regulatory fines, and reputational harm.
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.
Failure to renew significant contracts upon expiration would adversely affect our results. 24 Table o f Contents Reliance on landowners : We require rights-of-way, colocation agreements, franchises, licenses, and other authorizations from governmental bodies, railway companies, utilities, carriers, and other third-party landowners to locate a portion of our network equipment over, on or under their respective properties, or to conduct operations within their jurisdictions.
We may experience (i) disputes with the purchasers regarding the nature and sufficiency 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.
Consequently, we may: • face disputes with purchasers regarding the scope or adequacy of transition services or the terms of our commercial agreements; • incur greater costs or fewer benefits than anticipated under post-closing agreements, including tax or other expenses; • 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.
These allegations have resulted in regulatory inquiries and lawsuits, and could in the future subject us to legislative or regulatory actions, removal costs, compliance costs or penalties. Accordingly, we may incur substantial expenses, which could have a material adverse impact on our financial results or condition.
These allegations have led to regulatory inquiries and lawsuits and could result in legislative or regulatory actions, removal or compliance costs, or penalties. Accordingly, we may incur substantial expenses that could materially adversely affect our financial condition or results of operations.
As of December 31, 2024, our company-sponsored benefit plans that cover our current and former U.S.-based employees had approximately 21,000 active employee participants, approximately 52,000 active and retired employees and surviving spouses eligible for post-retirement healthcare benefits, approximately 21,000 pension retirees and approximately 7,000 former employees with vested pension benefits.
Funding obligations for employee benefit plans could negatively impact profitability Our company-sponsored benefit plans cover current and former U.S.-based employees, including active employees, retirees, and surviving spouses eligible for post-retirement healthcare benefits, as well as pension retirees and former employees with vested pension benefits.
We expect to continue to require significant capital to pursue our Quantum Fiber buildout plans, to perform our buildout obligations under certain of our PCF agreements, and to otherwise maintain, upgrade and expand our network infrastructure and product offerings.
We expect to fulfill obligations under certain PCF agreements, and maintain, upgrade, and expand our network infrastructure and product offerings.
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. As a holding company, we rely on payments from our operating companies to meet our obligations.
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. 30 Table o f Contents Our ability to meet our obligations depends on cash flows from our subsidiaries.
In connection with divesting our Latin American and EMEA businesses and a portion of our ILEC 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.
In connection with divesting our EMEA business in 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 can be and has been challenging and time-consuming to provide transition services, and we expect this will continue to be the case.
Several of our services continue to experience declining revenue, and our efforts to offset these declines may not be successful. Primarily as a result of the competitive and technological changes discussed above, we have experienced a prolonged systemic decline in our local voice, long-distance voice, network access and private line revenues.
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.
Moreover, our rights to receive assets of any subsidiary upon its liquidation or reorganization would 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.
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.
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.
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 significant levels of debt and related debt service obligations could adversely affect us in several respects, including: • requiring us to dedicate a substantial portion of our cash flow from operations to the payment of interest and principal on our debt, thereby reducing the funds available to us for other purposes, including acquisitions, capital expenditures and strategic initiatives; • hindering our ability to capitalize on business opportunities and to plan for or react to changing market, industry, competitive or economic conditions; • 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 impacting other parties’ perception of Lumen, including but not limited to existing or potential customers, vendors, employees, creditors or investors; • making it more difficult or expensive for us to obtain any necessary future financing or refinancing, including the risk that this could force us to sell assets or take other less 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.
We carry significant levels of debt and related debt service obligations, which could adversely affect us in several ways, including: • requiring us to allocate a large portion of operating cash flow to interest and principal payments, reducing funds available for other purposes, including acquisitions, capital expenditures, and strategic initiatives; • limiting our ability to capitalize on business opportunities or adequately respond to changing market, industry, or economic conditions; • increasing vulnerability to economic or industry downturns and interest rate fluctuations — particularly on variable-rate debt; • placing us at a competitive disadvantage compared to less leveraged companies; • negatively affecting perceptions of our company among customers, vendors, employees, creditors, and investors; • making it more difficult or costly to obtain future financing or refinancing, potentially forcing asset sales or other unfavorable actions to raise capital; and • heightening the risk of covenant breaches or missed payments, which could trigger acceleration of some or all of our outstanding debt.
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.
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.
Most of the debt of Level 3 Financing, Inc. is (i) secured by a pledge of substantially all of its assets and (ii) guaranteed on a secured basis by certain of its affiliates.
For example, most of Level 3 Financing, Inc.’s debt is secured by substantially all of its assets and guaranteed on a secured basis by affiliates, while other portions are guaranteed on an unsecured basis. Certain subsidiaries of Qwest Communications International Inc. also carry debt.
Roughly three-quarters of the debt of Lumen Technologies, Inc. is guaranteed by certain of its principal domestic subsidiaries, some of which have pledged substantially all of their assets (including certain of their respective subsidiaries) to secure their guarantees. The remainder of the debt of Lumen Technologies, Inc. is neither guaranteed nor secured.
Lumen Technologies, Inc. and certain of its subsidiaries owe substantial amounts under various debt and financing arrangements, some of which are guaranteed or secured by principal domestic subsidiaries that have pledged substantially all of their assets. Other debt is neither secured nor guaranteed.
In addition, the reputational risk of unauthorized 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. There is a risk that negative or inaccurate information about Lumen, even if based on rumor or misunderstanding, could adversely affect our business.
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.
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.
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.
We face other 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) the risks and uncertainties inherent in acquiring or disposing of businesses, or engaging in other strategic transactions.
We face additional business risks, including: • 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. 25 Table o f Contents Legal and Regulatory Risks Complex and evolving regulations could increase operational and compliance costs.
As we continue to transform into a company that primarily serves Business customers requiring newer advanced products, we may be unable to attract and retain skilled and motivated leaders and employees who possess the technical, development, operational, sales or managerial expertise to execute our plans for transformation, innovation and strategic growth.
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.
As discussed in greater detail elsewhere herein, restrictions imposed by credit instruments or other agreements applicable to Level 3 Parent, LLC or its subsidiaries 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.
As 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, including Level 3 Parent, LLC and others. These restrictions include limitations on dividend payments.
Media reports concerning our legacy infrastructure could expose us to governmental actions, removal costs, litigation, compliance costs, penalties or reputational damage. Media reports issued in mid-2023 alleged that certain lead-sheathed cables that are part of our copper-based network infrastructure pose public health and environmental risks.
Any of these factors could materially adversely affect our operations and financial condition. Allegations regarding lead-sheathed cables could result in regulatory or governmental actions, litigation, significant costs, and reputational harm. Media reports in 2023 alleged that certain lead-sheathed cables in our copper-based network infrastructure pose public health and environmental risks.
Damage 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. 23 Table of Contents We could be harmed by cyber-attacks.
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. 22 Table o f Contents We could be materially impacted by cyber-attacks.
In addition, federal and state agencies that regulate the support program payments we receive or the fees that we charge for certain of our regulated services can, and from time to time do, reduce the amounts we receive or can charge.
Additionally, federal and state agencies that regulate support program payments and service fees may reduce the amounts we receive or can charge. Expanded regulation of 911 services is expected to increase costs and potential fines.
We may be unable to reach new agreements, and union employees may engage in strikes, work slowdowns or other labor actions, which could materially disrupt our ability to provide services and increase our costs. Even if we succeed in reaching new or replacement agreements, they may impose significant new costs on us that impair our competitive position.
While we maintain agreements with these unions, we cannot predict the outcome of future negotiations. Failure to reach new agreements could result in strikes, work slowdowns, or other labor actions that materially disrupt our services and increase costs. Even if new or replacement agreements are reached, they may impose significant additional costs that adversely affect our competitive position.
For all these reasons, you should not assume our subsidiaries will be able in the future to generate and distribute to us cash in amounts sufficient to fund our cash requirements. 32 Table of Contents We may not be able to fully utilize our NOLs.
For these reasons, you should not assume that our subsidiaries will be able to generate and distribute sufficient cash to meet our obligations. We may not be able to fully utilize our NOLs. We have substantial federal and state net operating loss ("NOL") carryforwards.
To remain competitive, we will need to 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.
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.
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.
Our attempts to capitalize on emerging market opportunities — especially AI — may fall short. Growth 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 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 and protect our proprietary rights. For a variety of reasons, however, these steps may not fully protect us, including due to inherent limitations on the ability to enforce these rights.
We cannot provide assurance regarding the ultimate impact of these matters. We may not be successful in protecting and enforcing our intellectual property rights. We rely on patents, copyrights, trade names, trademarks, service marks, trade secrets, and other intellectual property rights, as well as confidentiality agreements and procedures, to safeguard our proprietary assets.
Our ability to successfully compete could be hampered if we fail to timely develop and market innovative technology solutions that address changing customer demands. The technology and communications industry has been and continues to be impacted by significant technological changes, which are increasing demand for digitally-integrated products and enabling an increasing variety of companies to compete with us.
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.
Responding to these actions can be costly and time-consuming and may disrupt our operations and divert the attention of our Board of Directors and management. These adverse impacts could be intensified if activist shareholders advocate actions that are not supported by other shareholders, our Board or management.
Responding to such actions can be costly, time-consuming, and disruptive to operations, diverting the attention of our Board of Directors and management from day-to-day operations. These impacts may be heightened if activist shareholders advocate actions that lack broad shareholder, Board, or management support. In addition, the recent rise in debtholders could increase the risk of claims under our debt agreements.
Some of our current and potential competitors: (i) offer products or services that are substitutes for our traditional wireline services, including wireless broadband, wireless voice and non-voice communication 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.
Many of these competitors: • offer products and services that substitute for our legacy wireline offerings, including wireless broadband and voice or non-voice communication services; • provide a more comprehensive portfolio of communications products and services; • 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.
Our use of AI may give rise to risks related to harmful content, inaccurate output, bias, intellectual property infringement or misappropriation, defamation, privacy incidents, and cybersecurity vulnerabilities, among others. The United States, the European Union and other governmental bodies have taken initial steps to regulate AI, which could ultimately increase AI’s legal risks or decrease its usefulness.
Risks associated with our use of AI include harmful or inaccurate outputs, bias, intellectual property infringement or misappropriation, defamation, privacy incidents, and cybersecurity vulnerabilities. In addition, emerging regulations in the United States, the European Union, and other jurisdictions could increase legal exposure or limit AI’s utility.
For these 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. 30 Table of Contents If we are unable to make required debt payments or refinance our debt, we would likely have to consider other options, such as selling assets, issuing additional securities, cutting or delaying costs or otherwise reducing our cash requirements, or negotiating with our lenders to restructure our applicable debt.
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 may need to consider alternatives such as selling assets, issuing additional securities, reducing or delaying expenditures, or negotiating debt restructurings.
Lapses in our disclosure controls and procedures or internal control over financial reporting could materially and adversely affect us.
See Note 11 — Employee Benefits in Item 8 for additional information regarding the funded status of our pension plans and our other post-retirement benefit plans. Lapses in our disclosure controls and procedures or internal control over financial reporting could materially and adversely affect us.
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.
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.
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.
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.
We remain vulnerable to future disruptions due to several factors, including the challenges of maintaining and replacing aging or obsolete network elements, human error, continuous changes in our network, the introduction of new products or technologies, vulnerabilities in our vendors or supply chain, aberrant employees and hardware and software limitations.
We remain vulnerable due to factors such as aging infrastructure, human error, continuous changes in our network, introduction of new products and technologies, vendor and supply chain weaknesses, rogue employees, and hardware or software limitations. Remediation efforts may be more costly, time-consuming, disruptive, and resource intensive than anticipated.
Our ability to arrange additional financing will depend on, among other factors, our financial position, performance, credit ratings, and debt covenants.
We 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.
From time to time these events (including Hurricane Ian in 2022 in Florida) 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.
These events have disrupted operations in the past and may occur again, potentially causing significant damage such as downed transmission lines, flooded facilities, power outages, fuel shortages, network delays or failures, property and equipment loss, and business interruptions.
We discontinued paying dividends to our holders of common stock in the fourth quarter of 2022, and have no current plans to pay dividends in respect of our common stock for the foreseeable future. 34 Table of Contents Shareholder or debtholder activism efforts could cause a material disruption to our business.
We currently do not pay dividends to our common shareholders. We discontinued paying dividends to our holders of common stock in 2022 and have no current plans to pay dividends in respect of our common stock for the foreseeable future. Not paying dividends could make the stock less attractive to certain investors, potentially impacting demand and share price.
Instability in the domestic or global financial markets has from time to time 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.
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.
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.
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.
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.
Subject to limited exceptions for tax or cash management purposes, non-guarantor subsidiaries are not required to provide us with cash through dividends, loans, or other transfers.
Finally, we expect that expanded regulation of 911 emergency services will increase our costs and exposure to fines for noncompliance. As a carrier of last resort for certain of our Mass Market customers, we could be required to provide services under circumstances that are economically disadvantageous or that divert resources from other business priorities.
Finally, as a carrier of last resort for certain Mass Market customers, we may be required to provide services under economically disadvantageous conditions, diverting resources from other business priorities. 26 Table o f Contents We may face legal and reputational risks related to third-party content on our network.
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.
Reliance on key customer contracts . We maintain several complex, high-value contracts with national and global customers. These contracts are subject to factors that may reduce or eliminate profitability.
While we always welcome constructive input from our shareholders and regularly engage in dialogue with our shareholders to that end, activist shareholders may from time to time engage in proxy solicitations, submit shareholder proposals or otherwise attempt to effect changes or acquire control over us.
Shareholder or debtholder activism efforts could cause a material disruption to our business. While we value constructive input and regularly engage with our shareholders, activist shareholders may at times pursue proxy solicitations, submit shareholder proposals, or otherwise seek to influence our strategy or gain control over us.
The process for remediating any interruptions, outages, delays or cessations of service could be more expensive, time-consuming, disruptive and resource intensive than planned. Delayed sales, lower margins, fines or lost customers resulting from future disruptions could have a material adverse impact on our business, reputation, results of operations, financial condition, cash flows and stock price.
Future disruptions could lead to delayed sales, lower margins, fines, or customer attrition, any of which could have a material adverse impact on our business, reputation, results of operations, financial condition, cash flows, and stock price. Our ability to conduct our operations is materially reliant on key suppliers, vendors, customers, and other third parties.
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.
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.
Any or all of the foregoing developments could have a material adverse impact on us. We believe the importance of our network 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.
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.
For all these reasons, our use of AI could materially harm our business, operations or reputation. 28 Table of Contents We have been accused of infringing the intellectual property rights of others and will likely face similar accusations in the future.
For these reasons, our use of AI could materially harm our business, operations, or reputation. Intellectual property claims could result in significant costs and operational disruptions. We have in the past and may in the future receive notices or be named in lawsuits alleging infringement of third-party intellectual property rights.
We cannot assure you we will be able to utilize these NOLs as projected or at all. Increases in costs for pension and healthcare benefits for our active and retired employees may have a material impact on us.
We cannot assure you we will be able to utilize our federal or state NOLs as projected or at all.
To offer certain services in certain of our markets, we must either purchase services or lease network capacity from, or interconnect our network with, the infrastructure of other communications carriers or cloud companies who typically compete against us in those markets.
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.
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 on terms acceptable to us, including due to business interruptions, security incidents, litigation, financial distress, bankruptcy or changes in their operations or business strategies. 25 Table of Contents Reliance on key licensors.
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.
In addition, if the U.S. continues increasing its tariffs, we could incur additional expense we may be unable to recover from our customers.
In addition, increases in U.S. tariffs could result in additional costs that we may not recover from customers.
We may also experience reputational harm from negative assertions about the public health or environmental impact of our lead-sheathed cables, which could adversely affect our business, even if such allegations ultimately prove to be inaccurate.
In addition, negative assertions about the health or environmental impact of our lead-sheathed cables — even if ultimately unfounded — could damage our reputation.
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.
We cannot assure successful renewal or replacement of these arrangements. Extreme weather and climate change could disrupt operations and increase costs. Many of our domestic facilities are located in regions susceptible to severe weather and natural disasters, including tropical storms, hurricanes, tornadoes, earthquakes, floods, wildfires, or other casualty events.
More recently, wholesale pricing pressure and other factors have caused us to experience declines in revenue derived from a broader array of our products and services, including those marketed to our Business customers as our “nurture” and “harvest” offerings.
More recently, pricing pressure and other factors have contributed to revenue declines across a broader array of products and services, including offerings marketed to our Business customers. 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.
Third-party content stored or transmitted on our networks could result in liability or otherwise damage our reputation. While we disclaim liability for third-party content in most of our service contracts, as a private network provider we potentially could be exposed to legal claims relating to third-party content stored or transmitted on our networks.
Although our service contracts generally disclaim liability for third-party content, as a private network provider we could be subject to claims arising from content stored or transmitted on our systems. These claims may include allegations of defamation, invasion of privacy, copyright infringement, or facilitating prohibited activities such as online gambling or pornography.
Our failure to comply with complex governmental regulations and laws applicable to these programs, or the terms of our governmental contracts, could result in us suffering 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.
We provide services to various federal, state and local agencies. Failure to comply with complex regulations, laws, or contractual terms could result in penalties, negative publicity, suspension or debarment from future programs, or revocation of FCC licenses. Government agencies reserve the right to terminate contracts for convenience or lack of funding, which could materially impact our results of operations.
We operate in an intensely competitive industry and existing and future competitive pressures could harm our performance. Each of our Business and Mass Market 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.
Our Business and Mass Market offerings face intense competition from a broad range of providers under evolving market conditions that have increased both the number and diversity of competitors.
Our ability to do so could be restricted by various factors, including limitations of our existing network, technology, capital or personnel.
Our ability to achieve these objectives may be constrained by limitations in our network, technology, capital resources, or personnel.
These capital requirements are driven by several factors, including (i) changes in customers’ service requirements; (ii) our need to continue to maintain aging or obsolete infrastructure until it can be replaced; (iii) our continuing need to expand and improve our network to remain competitive and meet customer demand; and (iv) our regulatory and contractual commitments.
These capital needs are influenced by factors such as: • evolving customer service requirements; • the need to maintain aging or obsolete infrastructure until replacement; • ongoing investments to enhance our network to remain competitive and meet demand; and • regulatory and contractual commitments. Failure to make necessary capital expenditures could adversely affect our financial performance and prospects.
Even if successfully implemented, these transactions could be detrimental to our operations, financial performance or future prospects. We have a highly complex debt structure, which could impact the rights of our investors. Lumen Technologies, Inc. and various of its subsidiaries owe substantial sums pursuant to various debt and financing arrangements, certain of which are guaranteed by other principal subsidiaries.
However, our debt agreements and market conditions may restrict or limit our ability to implement these actions on favorable terms, or at all. Even if implemented, these measures could negatively affect our operations, financial performance, or future prospects. We have a highly complex debt structure, which could impact the rights of our investors.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeCyber-attacks can take many forms, including computer hackings, computer viruses, ransomware, worms or other destructive or disruptive software, denial of service attacks, or other malicious activities. To identify, assess and mitigate cybersecurity risk, we have implemented a global information security management program that includes administrative, technical, and physical safeguards.
Biggest changeTo identify, assess and mitigate cybersecurity risk, we have implemented a global information security management program that includes administrative, technical, and physical safeguards. This program seeks to identify, detect, protect against, and respond to threats to our information systems. Our security operations center provides advanced threat detection and response capabilities.
Our CSO has extensive experience working in the public and private sectors leading security organizations, 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.
Our CSO has extensive experience working in the public and private sectors leading security organizations, managing risk 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.
Governance As part of our overall risk management approach, we prioritize the identification and management of cybersecurity risk at several levels, including oversight by our Board of Directors, executive commitment and employee training. Our Risk and Security Committee, comprised of independent directors from our Board, assists the Board in overseeing our cybersecurity and data privacy risk.
Governance As part of our overall risk management approach, we prioritize the identification and management of cybersecurity risk at several levels, including oversight by our Board of Directors, executive commitment, and employee training. Our Risk and Security Committee, comprising independent directors from our Board, assists the Board in overseeing our cybersecurity and data privacy risk.
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. 37 Table of Contents • 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.
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. 36 Table o f Contents • 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.
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 and integrity of information and systems under our control.
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 confidentiality, integrity and availability of information and systems under our control.
As a U.S. government contractor, we are required to comply with extensive governmental regulations and standards regarding cyber security. We periodically engage both internal and external auditors and consultants to assess and enhance our program.
As a U.S. government contractor, we are required to comply with extensive governmental regulations and standards regarding cyber security. We periodically engage both internal and external auditors and consultants to assess and enhance our program and to assist in responding to cybersecurity incidents.
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).
Despite our efforts to manage cybersecurity risks and 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 or is reasonably likely to result in a material adverse effect on our business strategy, 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).
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.
Our CSWAT comprises 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.
We also mutually exchange threat intelligence with government agencies, cyber analysis centers and cybersecurity associations. As noted elsewhere in this annual report, we are materially reliant on a variety of third-party service providers to operate our business, which exposes us to the risk of cyber incidents impacting those providers’ systems.
As noted elsewhere in this annual report, we are materially reliant on a variety of third-party service providers to operate our business, which exposes us to the risk of cyber incidents impacting those providers’ systems.
These escalation provisions, together with our disclosure controls and procedures, are designed to ensure that appropriate representatives throughout the Company are available to assess how to respond to such incidents and make any necessary public notifications. Our Cybersecurity Incident Response Team (“CIRT”) is responsible for detecting and coordinating responses to all security incidents.
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. Our Cybersecurity Incident Response Team (“CIRT”) is responsible for detecting and coordinating responses to appropriate security incidents.
See Item 1A “Risk Factors” for a further discussion of cybersecurity risks. 36 Table of Contents We maintain an Incident Response Playbook that provides a set of guidelines for our stakeholders to follow when handling any data incident.
See “Risk Factors” in Item 1A for a further discussion of cybersecurity risks and how they have affected or may affect us. 35 Table o f Contents We maintain an Incident Response Playbook that provides a set of guidelines for our stakeholders to follow when handling any data incident.
These independent external auditors and consultants are accredited under various information security standards, including those administered by the International Organization for Standardization and the PCI Security Standards Council. These engagements typically include penetration testing, third-party certifications, compliance assessments, audits, and assessments of vulnerabilities and emerging threats. We also periodically deploy our Internal Audit processes to conduct additional reviews and assessments.
Many of these independent external auditors and consultants are accredited under various information security standards, including those administered by the International Organization for Standardization and the PCI Security Standards Council. These engagements typically include penetration testing, third-party certifications, compliance assessments, audits, and assessments of vulnerabilities and emerging threats, as well as digital forensics and related work.
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 our Board of Directors and our senior leadership team. Some of the more significant risks discussed by the ROC are also reported to our Risk and Security Committee at least quarterly.
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 our Board of Directors and our senior leadership team.
We have a vendor risk management program that assesses, manages and oversees risks associated with third-party service providers who have access to our data and systems. We maintain ongoing monitoring to ensure their compliance with our cybersecurity standards.
We have a vendor risk management program that assesses, manages and oversees risks associated with third-party service providers who have access to our data and systems. We engage in diligence, contracting or maintain ongoing monitoring for compliance with our cybersecurity standards, depending on our assessment of each provider's operational criticality and risk profile.
Our cybersecurity and privacy policies encompass information security, incident response procedures, and vendor management. Our risk management team works closely with our information technology, privacy, product, and operations departments to continuously evaluate emerging cyber risk.
Our risk management team works closely with our information technology, privacy, product, and operations departments to continuously evaluate emerging cyber risk as part of our overall risk management program.
He oversees the implementation and compliance of our information security standards and mitigation of information security related risks.
He oversees the implementation and compliance of our information security standards and is primarily responsible for managing our processes to assess and mitigate information security related risks.
This program seeks to identify, detect, protect and respond to threats to our information systems. Our security operations center provides advanced threat detection and response capabilities. We maintain an insider threat program to detect, investigate and mitigate insider threat risks to Lumen assets, data, services and personnel globally.
We maintain an insider threat program to detect, investigate and mitigate insider threat risks to Lumen assets, data, services and personnel globally. Our cybersecurity and privacy policies encompass information security, incident response procedures, and vendor management.
This team regularly assesses its communication plan to confirm that its members can be alerted quickly in the event of an actual crisis and meet as a team to discuss response options. The CIRT also addresses each incident, unless it determines that an incident is sufficiently serious.
This team regularly assesses its internal communication plan and meet as a team to discuss response options. The CIRT also addresses each incident, unless it determines that an incident is sufficiently serious. In those instances, it notifies our Cyber Security Watch Team (“CSWAT”), which is responsible for addressing cybersecurity incidents that raise more significant risks.
We view cybersecurity risk as one of our principal enterprise-wide risks, subject to control and monitoring at various levels of management throughout the Company. We dedicate significant resources towards programs designed to identify, assess, manage, mitigate and respond to cybersecurity threats.
Our cybersecurity risk management program is integrated into our overall enterprise risk management program, and shares common methodologies, reporting channels and governance processes that apply across the enterprise program to other key risk areas. We dedicate significant resources towards programs designed to identify, assess, manage, mitigate and respond to cybersecurity threats.
Removed
As described in Item 1A “Risk Factors,” several features of our operations heighten our susceptibility to cyber-attacks, including (i) our material reliance on systems owned, operated or controlled by unaffiliated third-party operators and (ii) our processing and storage of large amounts of sensitive customer data.
Added
We also periodically deploy our Internal Audit processes to conduct additional reviews and assessments. We also mutually exchange threat intelligence with government agencies, cyber analysis centers and cybersecurity associations.
Removed
Cyber-attacks on our systems may be initiated by a wide variety of intruders, including employees, cyber-criminals, nation state actors and other advanced persistent threat actors, and may include attempts by outside parties to gain access to sensitive data that is stored in or transmitted across our network.
Added
Some of the more significant risks discussed by the ROC are also reported to our Risk and Security Committee at least quarterly. 37 Table o f Contents
Removed
In those instances, it will notify our Cyber Security Watch Team (“CSWAT”), which is responsible for addressing cybersecurity incidents that raise more significant risks. Our CSWAT is comprised of senior IT, operations, risk, legal and compliance leaders across business segments.

Item 2. Properties

Properties — owned and leased real estate

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Biggest change(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. We own a substantial portion of our telecommunications equipment required for our business. However, we also lease from third parties certain facilities, network capacity and equipment under various lease or other arrangements.
Biggest changeWe own a substantial portion of our telecommunications equipment essential to our operations, but, we also lease certain facilities, network capacity, and equipment from third parties under various agreements. We also own or lease administrative offices in major U.S. and international metropolitan areas.
Our gross property, plant and equipment consisted of the following components as of the dates below: As of December 31, 2024 2023 Land 1 % 2 % Fiber, conduit and other outside plant (1) 40 % 37 % Central office and other network electronics (2) 38 % 38 % Support assets (3) 16 % 16 % Construction in progress (4) 5 % 7 % 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.
Our gross property, plant and equipment consisted of the following components as of the dates below: December 31, 2025 (5) 2024 Land 1 % 1 % Fiber, conduit and other outside plant (1) 39 % 40 % Central office and other network electronics (2) 38 % 38 % Support assets (3) 16 % 16 % Construction in progress (4) 6 % 5 % 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.
Substantial portions of our property, plant and equipment are pledged to secure the long-term debt of our subsidiaries or the guarantee obligations of our subsidiary guarantors.
Substantial portions of our property, plant and equipment are pledged to secure the long-term debt of our subsidiaries or the guarantee obligations of our subsidiary guarantors. For additional information, see Note 9 — Property, Plant and Equipment in Item 8.
Outside of our local service area, our assets are generally located on real property pursuant to an agreement with the property owner or another person with rights to the property.
Substantially all of our network electronics equipment is housed in buildings or on land we own or lease within our local service area. Outside our local service area, our assets are generally located on real property under agreements with the property owner or another person with rights to the property.
For additional information, see Note 9—Property, Plant and Equipment to our consolidated financial statements in Item 8 of Part II of this report. 38 Table of Contents We have entered into various agreements regarding our unused office and technical space to reduce our ongoing operating expenses regarding such space.
We have entered into various agreements regarding our unused office and technical space to reduce our ongoing operating expenses regarding such space.
It is possible that we may lose our rights under one or more of these agreements, due to their termination or expiration or in connection with legal challenges to our rights under such agreements. Our net property, plant and equipment was approximately $20.4 billion and $19.8 billion at December 31, 2024 and 2023, respectively, excluding assets held for sale.
These agreements may expire, terminate, or be legally challenged, which could result in the loss of our rights. The carrying amount of our net property, plant and equipment was approximately $19.6 billion and $20.4 billion as of December 31, 2025 and 2024, respectively, excluding assets held for sale.
Removed
We also own or lease administrative offices in major metropolitan locations both in the United States and internationally. Substantially all of our network electronics equipment is located in buildings or on land that we own or lease, typically within our local service area.
Added
(4) Construction in progress includes inventory held for construction and property of the aforementioned categories that has not been placed in service as it is still under construction. (5) These values exclude assets classified as held for sale as of December 31, 2025.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeITEM 3. LEGAL PROCEEDINGS The information contained under the subheadings "Principal Proceedings" and "Other Proceedings, Disputes and Contingencies" in Note 18—Commitments, Contingencies and Other Items to our consolidated financial statements included in Item 8 of Part II of this report is incorporated herein by reference.
Biggest changeITEM 3. LEGAL PROCEEDINGS The information contained under the subheadings "Principal Proceedings" and "Other Proceedings, Disputes and Contingencies" in Note 17 — Commitments, Contingencies and Other Items in Item 8 is incorporated herein by reference. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 38 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeIssuer Purchases of Equity Securities The following table contains information about shares of our previously-issued common stock that we withheld from employees upon vesting of their stock-based awards during the fourth quarter of 2024 to satisfy the related tax withholding obligations: Total Number of Shares Withheld for Taxes Average Price Paid Per Share Period October 2024 31,772 $ 6.32 November 2024 53,569 9.10 December 2024 25,519 7.12 Total 110,860 For a description of our share repurchases in late 2022 under a share repurchase program that lapsed in November 2024, see Note 20—Repurchases of Lumen Common Stock to our consolidated financial statements included in Item 8 of Part II of this report.
Biggest changeIssuer Purchases of Equity Securities The following table contains information about shares of our previously-issued common stock that we withheld from employees upon vesting of their stock-based awards during the fourth quarter of 2025 to satisfy the related tax withholding obligations: Total Number of Shares Withheld for Taxes Average Price Paid Per Share Period October 2025 18,661 $ 6.60 November 2025 53,795 10.27 December 2025 26,442 7.89 Total 98,898 ITEM 6. [Reserved]
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is listed on the New York Stock Exchange ("NYSE") and the Berlin Stock Exchange and is traded under the symbol LUMN and CYTH, respectively.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock is listed on the New York Stock Exchange ("NYSE") and the Berlin Stock Exchange and is traded under the symbol LUMN and CYTH, respectively.
At February 18, 2025, there were approximately 74,000 stockholders of record, although there were significantly more beneficial holders of our common stock.
Holders At February 17, 2026, there were approximately 70,542 stockholders of record, although there were significantly more beneficial holders of our common stock. Recent Sales of Unregistered Securities None.
Removed
Equity Compensation Plan Information See Item 12 of this report. ITEM 6. [Reserved]

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Biggest changeItem 6. [Reserved] 40 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 40 O verview 40 R esults of Operations 43 S egment Results 47 Critical Accounting Policies and Estimates 51 L iquidity and Capital Resources 55 M arket Risk 62 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 62 Item 8.
Biggest changeItem 6. [Reserved] 39 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 39 Overview 40 Results of Operations 42 Segment Results 45 Liquidity and Capital Resources 49 Critical Accounting Estimates 58 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 64 Item 8.
Consolidated Financial Statements and Supplementary Data 63 Consolidated Statements of Operations 66 Consolidated Statements of Comprehensive Income (Loss) 67 Consolidated Balance Sheets 68 Consolidated Statements of Cash Flows 69 Consolidated Statements of Stockholders' Equity 71 Notes to Consolidated Financial Statements 72
Consolidated Financial Statements and Supplementary Data 65 Consolidated Statements of Operations 68 Consolidated Statements of Comprehensive (Loss) Income 69 Consolidated Balance Sheets 70 Consolidated Statements of Cash Flows 71 Consolidated Statements of Stockholders' (Deficit) Equity 73 Notes to Consolidated Financial Statements 74

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeResults in this section include the results of our Latin American, ILEC and EMEA businesses prior to their sale on August 1, 2022, October 3, 2022 and November 1, 2023 respectively. 43 Table of Contents Operating Revenue The following table summarizes our consolidated operating revenue recorded under each of our two segments and in our five revenue sales channels within the Business segment described above: Years Ended December 31, 2024 vs 2023 % Change 2023 vs 2022 % Change 2024 2023 2022 (Dollars in millions) Business Segment: Large Enterprise $ 3,379 3,618 3,827 (7) % (5) % Mid-Market Enterprise 1,887 2,044 2,242 (8) % (9) % Public Sector 1,849 1,789 1,863 3 % (4) % Wholesale 2,875 3,152 3,605 (9) % (13) % International and Other 373 980 1,562 (62) % (37) % Business Segment Revenue 10,363 11,583 13,099 (11) % (12) % Mass Markets Segment Revenue 2,745 2,974 4,379 (8) % (32) % Total operating revenue $ 13,108 14,557 17,478 (10) % (17) % Our consolidated operating revenue decreased by $1.4 billion for the year ended December 31, 2024 as compared to the year ended December 31, 2023, $547 million of which was due to the sale of the EMEA business and select CDN contracts in the fourth quarter of 2023.
Biggest changeOperating Revenue The following table summarizes our consolidated operating revenue by segment and sales channels within the Business segment as described in Note 4 — Revenue Recognition in Item 8: Years Ended December 31, 2025 vs 2024 % Change 2024 vs 2023 % Change 2025 2024 2023 (Dollars in millions) Business Segment: Large Enterprise $ 2,979 3,039 3,171 (2) % (4) % Mid-Market Enterprise 1,973 2,212 2,490 (11) % (11) % Public Sector 1,904 1,856 1,791 3 % 4 % Wholesale 2,714 2,886 3,152 (6) % (8) % International and Other 325 373 982 (13) % (62) % Business Segment Revenue 9,895 10,366 11,586 (5) % (11) % Mass Markets Segment Revenue 2,507 2,742 2,971 (9) % (8) % Total operating revenue $ 12,402 13,108 14,557 (5) % (10) % Operating revenue decreased $706 million in 2025 compared to 2024.
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.
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.
In addition to indebtedness under their March 22, 2024 credit agreements, Lumen and Level 3 Financing, Inc. are indebted under their respective outstanding senior notes, and certain of Lumen's other subsidiaries are indebted under their respective outstanding senior notes.
In addition to indebtedness under their above-mentioned credit agreements, Lumen and Level 3 Financing are indebted under their respective outstanding senior notes, and certain of Lumen's other subsidiaries are indebted under their respective outstanding senior notes.
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.
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.
Other Consolidated Results The following tables summarize our total other expense, net and income tax expense: Years Ended December 31, % Change 2024 2023 (Dollars in millions) Interest expense $ (1,372) (1,158) 18 % Net gain on early retirement of debt 348 618 (44) % Other income (expense), net 334 (113) nm Total other expense, net $ (690) (653) 6 % Income tax (benefit) expense $ (175) 61 nm _______________________________________________________________________________ nm Percentages greater than 200% and comparisons between positive and negative values or to/from zero values are considered not meaningful.
Other Consolidated Results The following tables summarize our total other expense, net and income tax expense: Years Ended December 31, % Change 2025 2024 (Dollars in millions) Interest expense $ (1,284) (1,372) (6) % Net (loss) gain on early retirement of debt (740) 348 nm Other income, net 120 334 (64) % Total other expense, net $ (1,904) (690) 176 % Income tax benefit $ (977) (175) nm _______________________________________________________________________________ nm Percentages greater than 200% and comparisons between positive and negative values or to/from zero values are considered not meaningful.
The impairment analyses of these assets are considered critical because of their significance to us and our segments and the subjective nature of certain assumptions used to estimate fair value.
The impairment analyses of these assets are considered critical because of their significance to us and our segments, the subjective nature of certain assumptions used to estimate fair value, and because it can materially impact reported results and future expense.
In computing our periodic pension expense, our most significant assumptions are the discount rate and the expected rate of return on plan assets. In computing our post-retirement benefit expense, our most significant assumption is the discount rate.
Key Assumptions In computing our pension and post-retirement health care and life insurance benefit obligations, our most significant assumptions are the discount rate and mortality rates. In computing our periodic pension expense, our most significant assumptions are the discount rate and the expected rate of return on plan assets.
We had approximately $59 million of cash and cash equivalents outside the United States at December 31, 2024. We currently believe that there are no material restrictions on our ability to repatriate cash and cash equivalents into the United States, and that we may do so without paying or accruing U.S. taxes or significant foreign taxes.
Certain subsidiary debt covenants may limit upstreaming of cash. We currently believe there are no material restrictions on our ability to repatriate cash and cash equivalents into the United States, and that we may do so without paying or accruing significant U.S. or foreign taxes.
We report under two segments: Business and Mass Markets. As of December 31, 2024, we had three reporting units for goodwill impairment testing: (i) Mass Markets, (ii) North America Business ("NA Business") and (iii) Asia Pacific ("APAC") region.
As of April 30, 2025, we had three reporting units for goodwill impairment testing, which are (i) Mass Markets, (ii) North America Business ("NA Business") and (iii) Asia Pacific ("APAC") region.
Mass Markets segment expense decreased by $165 million for the year ended December 31, 2024 compared to December 31, 2023 primarily due to (i) a decrease of $60 million in employee-related costs, (ii) a decrease of $36 million in other network related costs, (iii) a decrease of $33 million in professional fees, and (iv) a decrease of $10 million in network expenses.
Mass Markets segment expense decreased $169 million in 2024 compared to 2023. This was primarily as a result of: • a decrease of $60 million in employee-related costs; • a decrease of $36 million in other network related costs; • a decrease of $33 million in professional fees; and • a decrease of $10 million decrease in overall network expenses.
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.
Previous media reports regarding potential health and environmental risks associated with these cables have led to regulatory inquiries and lawsuits, and may result in legislative or regulatory actions, removal costs, compliance costs, or penalties.
Net Loss on Sale of Businesses For a discussion of the net loss on the sale of businesses that we recognized for the years ended December 31, 2024 and December 31, 2023, see Note 2—Divestitures of the Latin American, ILEC and EMEA Businesses.
Net Loss on Sale of Businesses For a discussion of the net loss on the sale of businesses that we recognized for 2025 and 2024, see Note 2 — Divestitures in Item 8.
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.
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.
Years Ended December 31, % Change 2024 2023 (Dollars in millions) Cost of services and products (exclusive of depreciation and amortization) $ 6,703 7,144 (6) % Selling, general and administrative 2,972 3,198 (7) % Net loss on sale of businesses 17 121 (86) % Depreciation and amortization 2,956 2,985 (1) % Goodwill impairment — 10,693 nm Total operating expenses $ 12,648 24,141 (48) % _______________________________________________________________________________ nm Percentages greater than 200% and comparisons between positive and negative values or to/from zero values are considered not meaningful. 44 Table of Contents Cost of Services and Products (exclusive of depreciation and amortization) Cost of services and products (exclusive of depreciation and amortization) decreased by $441 million for the year ended December 31, 2024 as compared to the year ended December 31, 2023.
Operating Expenses The following table summarizes our operating expenses; however, these expense categories may not be comparable to those of other companies: Years Ended December 31, % Change 2025 2024 (Dollars in millions) Cost of services and products (exclusive of depreciation and amortization) $ 6,638 6,703 (1) % Selling, general and administrative 3,199 2,972 8 % Net loss on sale of businesses — 17 nm Depreciation and amortization 2,749 2,956 (7) % Goodwill impairment 628 — nm Total operating expenses $ 13,214 12,648 4 % _______________________________________________________________________________ nm Percentages greater than 200% and comparisons between positive and negative values or to/from zero values are considered not meaningful.
This process establishes the uniform discount rate that produces the same present value of the estimated future benefit payments as is generated by discounting each year's benefit payments by a spot rate applicable to that year.
This process ensures a uniform rate that produces the same present value of the estimated future benefit payments as is generated by discounting each year’s benefit payments by spot rates derived from yields on the 60th–90th percentile of high-quality bonds.
The rate of return is determined by the strategic allocation of plan assets and the long-term risk and return forecast for each asset class.
Expected rate of return : The expected return on plan assets is the long-term return we anticipate earning on the plans’ assets, net of administrative expenses. The rate is determined based on the strategic allocation of plan assets and long-term risk and return forecasts for each asset class.
In addition, we expect our consolidated capital expenditures to increase as we use these cash receipts to fund network expansion projects contemplated under such agreements. 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.
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.
Results of Operations In this section, we discuss our overall results of operations and highlight special items that are not included in our segment results. In "Segment Results" we review the performance of our two reporting segments in more detail.
These and other developments and trends impacting our operations are discussed in "Risk Factors" in Item 1A and elsewhere throughout MD&A. 41 Table of Contents RESULTS OF OPERATIONS In this section, we discuss our overall results of operations and highlight special items that are not included in "SEGMENT RESULTS", which covers the performance of our two reporting segments in more detail.
At December 31, 2024, we had $220 million undrawn letters of credit outstanding, $217 million of which were issued under our revolving credit facilities, $1 million of letters of credit outstanding under our $225 million uncommitted letter of credit facility and $2 million of which were issued under a separate facility maintained by one of our subsidiaries (the full amount of which is collateralized by cash).
As of December 31, 2025, we had $234 million of total undrawn letters of credit, including $232 million issued under our revolving credit facilities and $2 million issued under a separate facility maintained by Lumen subsidiaries, the majority of which is collateralized by cash.
The effective tax rate for the year ended December 31, 2024 includes a $135 million favorable impact of the exclusion of cancellation of debt income under Section 108 of the Internal Revenue Code.
The effective tax rate for 2025 includes a $333 million favorable impact driven by statute of limitations releases on uncertain tax positions previously disclosed and for 2024 includes a $135 million favorable impact of the exclusion of cancellation of debt income under Section 108 of the Internal Revenue Code in 2024.
For information regarding expenses for the year ended December 31, 2022, see "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Item 7 of Part II of our Annual Report Form 10-K for the year ended December 31, 2023.
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.
In 2023, approximately 56% of the beginning net actuarial gain of $371 million at January 1, 2023 for the post-retirement benefit plans was subject to amortization as a component of net periodic expense, with the other 44% of the beginning net actuarial gain balance for the post-retirement benefit plans treated as indefinitely deferred.
As of January 1, 2023 the post-retirement benefit plans net actuarial gain balance was $371 million with 56% subject to amortization and 44% indefinitely deferred. Sensitivity Analysis Changes in any of the assumptions used could significantly affect benefit obligations and expenses.
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.
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.
We may also draw on our revolving credit facilities as a source of liquidity for operating activities and to give us additional flexibility to finance our capital investments, payments of debt, pension contributions and other cash requirements.
We also use our revolving credit facilities as a source of liquidity for operating activities and our other cash requirements.
Years Ended December 31, 2024 2023 (Dollars in millions) Pension and post-retirement net periodic expense $ (152) (158) Foreign currency loss (25) (10) Gain on sale of investment 205 — Loss on investment in limited partnership (10) (75) Loss on investment in equity securities — (22) Transition and separation services 157 186 Interest income 119 41 Other 40 (75) Other income (expense), net $ 334 (113) Income Tax Expense For the years ended December 31, 2024 and 2023, our effective income tax rate was 76.1% and (0.6)%, respectively.
Net (Loss) Gain on Early Retirement of Debt For a discussion of the debt transactions that resulted in the net (loss) gain on debt that we recognized in 2025 and 2024, see Note 7 — Long-Term Debt and Credit Facilities in Item 8. 44 Table of Contents Other Income, Net Other income, net reflects certain items not directly related to our core operations, including: Years Ended December 31, 2025 2024 (Dollars in millions) Pension and post-retirement net periodic expense $ (184) (152) Foreign currency gain (loss) 14 (25) Gain on sale of investment — 205 Loss on investment in limited partnership — (10) Transition and separation services 156 157 Interest income 75 119 Other 59 40 Other income, net $ 120 334 Income Tax Expense For 2025 and 2024, our effective income tax rate was 36.0% and 76.1%, respectively.
For additional information on these programs, see (i) Note 4—Revenue Recognition to our consolidated financial statements in Item 8 of Part II of this report, (ii) "Business—Regulation of Our Business" in Item 1 of Part I of this report and (iii) "Risk Factors—Legal and Regulatory Risks" in Item 1A of Part I of this report.
For additional information on these programs, see Note 4 — Revenue Recognition in Item 8, "Business — Regulation of Our Business" in Item 1, and "Risk Factors — Legal and Regulatory Risks" in Item 1A. Other Matters We maintain cash management and intercompany loan arrangements with most of our income-generating subsidiaries.
Approximately $547 million of the decrease for the year ended December 31, 2024 compared to December 31, 2023 was due to the sale of the EMEA business and select CDN contracts in the fourth quarter of 2023.
Business segment revenue decreased $1.2 billion in 2024 compared to 2023 driven by a $547 million decrease from the sale of the EMEA business and the sale of select CDN contracts in the fourth quarter of 2023.
When we performed a qualitative impairment test during the fourth quarter of 2024, we concluded it was more likely than not that the estimated fair value of each of our reporting units was greater than our carrying value of equity of each of our reporting units as of our testing date.
When we performed our impairment tests during the second quarter of 2025, we concluded that the estimated fair value of our Mass Markets reporting unit was less than our carrying value of equity for this unit as of our testing date.
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 are also involved in other legal proceedings that could materially affect our financial position. See Note 17 — Commitments, Contingencies and Other Items in Item 8. 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.
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 them as indefinite-lived intangible assets and such intangible assets are not amortized.
Other intangible assets, primarily capitalized software, not arising from business combinations are initially recorded at cost. Intangible assets without legal, regulatory, contractual, or other limiting factors are classified as indefinite-lived and are not amortized.
The forecasts for each asset class are generated primarily from an analysis of the long-term expectations of various third-party investment management organizations, to which we then add a factor of 50 basis points to reflect the benefit we expect to result from our active management of the assets.
These forecasts are primarily derived from third-party investment management organizations, to which we add a factor of 50 basis points to reflect the benefit we expect to result from our active management of the assets. The rate is reviewed annually by management and our Board of Directors and adjusted as needed for market or investment strategy changes.
Depreciation and Amortization The following table provides detail of our depreciation and amortization expense: Years Ended December 31, % Change 2024 2023 (Dollars in millions) Depreciation $ 1,890 1,932 (2) % Amortization 1,066 1,053 1 % Total depreciation and amortization $ 2,956 2,985 (1) % Depreciation expense decreased by $42 million for the year ended December 31, 2024 as compared to the year ended December 31, 2023 primarily due to a decrease of $63 million relating to changes in the depreciation lives of fiber network assets and a decrease of $52 million relating to a net decline in depreciable assets.
Depreciation and Amortization The following table provides detail of our depreciation and amortization expense: Years Ended December 31, % Change 2025 2024 (Dollars in millions) Depreciation $ 1,746 1,890 (8) % Amortization 1,003 1,066 (6) % Total depreciation and amortization $ 2,749 2,956 (7) % Depreciation decreased $144 million in 2025 compared to 2024.
For the year ended December 31, 2024 as compared to December 31, 2023, approximately $93 million of this decline was attributable to the above-mentioned sale of select CDN contracts in late 2023 and decreases in equipment sales revenue of approximately $29 million.
This was primarily as a result of: ◦ a decrease of $93 million from the sale of select CDN contracts in 2023; and ◦ a decrease of $29 million in equipment sales revenue. Business Segment Expense Business segment expense decreased $377 million in 2025 compared to 2024.
For additional information on the terms and conditions of other debt instruments of ours and our subsidiaries, including financial and operating covenants, see (i) Note 7—Long-Term Debt and Credit Facilities to our consolidated financial statements in Item 8 of Part II of this report and (ii) "—Other Matters" below. 57 Table of Contents Future Debt Transactions Subject to market conditions, we plan to continue to issue debt securities from time to time to refinance a substantial portion of our maturing debt, including issuing debt securities of certain of our subsidiaries to refinance their maturing debt to the extent permitted under our debt covenants and consistent with our capital allocation strategies.
For detailed terms, maturities, covenants, and outstanding balances, see Note 7 — Long-Term Debt and Credit Facilities in Item 8 and "— Other Matters" below. Future Debt Transactions Subject to market conditions, we expect to continue issuing debt securities as needed to refinance maturing obligations, including subsidiary debt, consistent with our capital allocation strategies and covenants.
In addition, in 2021, the Organization for Economic Co-operation and Development (“OECD”) has issued Pillar Two model rules introducing a new global minimum corporate tax of 15% and the OECD and the majority of its participating countries continue to work toward the enactment of such tax.
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.
For additional information, see Note 16—Income Taxes to our consolidated financial statements in Item 8 of Part II of this report and "Critical Accounting Policies and Estimates—Income Taxes." Segment Results General Reconciliation of segment revenue to total operating revenue is below.
For additional information, see Note 15 — Income Taxes in Item 8 and "CRITICAL ACCOUNTING ESTIMATES — Income Taxes" below. SEGMENT RESULTS In this section we provide a reconciliation of segment revenue to total operating revenue and discuss the performance of our two reporting segments. Our segment performance measurement is segment adjusted earnings before interest, tax, depreciation and amortization ("EBITDA").
As of the filing date of this report, the credit ratings for the senior secured and unsecured debt of Lumen Technologies, Inc., Level 3 Financing, Inc. and Qwest Corporation were as follows: Borrower Moody's Investors Service, Inc.
Availability, interest rates, and other terms of new borrowings will depend on credit ratings and market conditions, among other factors. As of the filing date of this report, credit ratings for our and our subsidiaries' senior secured and unsecured debt were: Borrower Moody's Investors Service, Inc.
We perform sensitivity analyses that consider 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 are reasonable. Nonetheless, changes in any of them can significantly affect whether we must incur impairment charges, as well as the size of such charges.
We perform sensitivity analyses using a range of discount rates and EBITDA multiples and believe our methods and assumptions are reasonable. However, any changes to these inputs can significantly impact whether impairment charges are required and the magnitude of those charges.
(1) Standard & Poor's (1) Fitch Ratings Lumen Technologies, Inc.: Unsecured Caa3 CCC- CCC- Secured Caa1/Caa2 B B+ Level 3 Financing, Inc.: Unsecured Caa1 CCC- CCC- Secured B2/Caa1 CCC+ B+/CCC Qwest Corporation: Unsecured Caa3 B- B+ _______________________________________________________________________________ (1) In August 2024, Moody's upgraded the Lumen Technologies Corporate Family Rating ("CFR") to Caa1 and placed the ratings of Lumen Technologies' debt on positive outlook.
Standard & Poor's Fitch Ratings (1) Lumen Technologies, Inc.: Unsecured Caa1 B BB Secured B3/Caa1 B+ BB Level 3 Financing, Inc.: Unsecured B3 B- B- Secured Ba3 B+ BB Qwest Corporation: Unsecured Caa1 B BB _______________________________________________________________________________ (1) In February 2026, both Moody's and Fitch upgraded our corporate family ratings to B2 and B, representing a one-notch and two-notch upgrade, respectively.
We amortize customer relationships primarily over an estimated life of seven to 14 years, using the straight-line method, depending on the customer. We amortize capitalized software using the straight-line method primarily over estimated lives ranging up to seven years. We amortize our other intangible assets using the straight-line method over an estimated life of nine to 20 years.
For finite-lived intangible assets, we amortize using the straight-line method over the following estimated lives: • Customer relationships : 7 - 14 years • Capitalized software : 3 - 7 years • Other intangible assets : 9 - 20 years The amount of future amortization expense may differ materially from current amounts, depending on the results of our annual reviews.
Although we periodically repay these advances to fund the subsidiaries' cash requirements throughout the year, at any given point in time we may owe a substantial sum to our subsidiaries under these arrangements.
Under these arrangements, a significant portion of subsidiary cash is periodically advanced or loaned to us or our service company affiliate. We repay these advances as needed to meet subsidiary cash requirements; however, at any point in time, we may owe a substantial amount to our subsidiaries.
We have assigned our goodwill balance to our segments at December 31, 2024 as follows: Business Mass Markets Total (Dollars in millions) As of December 31, 2024 $ — 1,964 1,964 Intangible assets arising from business combinations, such as goodwill, customer relationships, capitalized software, trademarks and trade names, are initially recorded at estimated fair value.
Allocation and Amortization Goodwill was allocated to our reporting units within the Business and Mass Markets segments when there is a change in composition. 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.
Federal Income Tax Obligations As of December 31, 2024, Lumen Technologies had approximately $570 million of federal NOLs which, for U.S. federal income tax purposes, may be used to offset future taxable income.
See "Risk Factors — Financial Risks" in Item 1A. 55 Table of Contents Income Tax Obligations Net Operating Loss Carryforwards As of December 31, 2025, we had approximately $982 million of U.S. federal NOLs that may be used to offset future federal taxable income.
In 2023, approximately 62% of the Combined Pension Plan's January 1, 2023 net actuarial loss balance of $1.4 billion was subject to amortization as a component of net periodic expense over the average remaining service period of 14 years for participating employees expected to receive benefits under the plan.
As of January 1, 2024 the post-retirement benefit plans net actuarial gain balance was $337 million with 75% subject to amortization and 25% indefinitely deferred. 61 Table of Contents As of the January 1, 2023 the Combined Pension Plan net actuarial loss balance of $1.4 billion, 62% was subject to amortization over an average remaining service period of 14 years and 38% indefinitely deferred during 2023.
These increases were partially offset by (i) a $24 million decrease due to a changed method of amortization as discussed in Note 1—Background and Summary of Significant Accounting Policies "— Change in Accounting Estimates", (ii) a $12 million decrease related to changes in our CDN customer relationships, and (iii) an $11 million decrease due to certain customer relationship intangible assets becoming fully amortized in the second quarter of 2023. 45 Table of Contents Further analysis of our segment operating expenses by segment is provided below in "Segment Results." Goodwill Impairments We are 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.
Further analysis of our segment operating expenses by segment is provided below in "Segment Results." 43 Table of Contents Goodwill Impairments We are 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.
We selected each plan's discount rate based on a cash flow matching analysis using hypothetical yield curves from high-quality U.S. corporate bonds and projections of the future benefit payments that constitute the projected benefit obligation for the plans.
In computing our post-retirement benefit expense, our most significant assumption is the discount rate. Discount rate : The discount rate reflects the rate at which obligations could be settled at year-end, determined based on a cash flow matching analysis using hypothetical yield curves from high-quality U.S. corporate bonds and projected benefit payments.
We also maintain post-retirement benefit plans that provide health care and life insurance benefits primarily for certain eligible retirees. 52 Table of Contents In 2024, approximately 64% of the Combined Pension Plan's January 1, 2024 net actuarial loss balance of $1.4 billion was subject to amortization as a component of net periodic expense over the average remaining service period of 13 years for participating employees expected to receive benefits under the plan.
As of January 1, 2025 the post-retirement benefit plans net actuarial gain balance was $404 million with 75% subject to amortization and 25% indefinitely deferred. As of January 1, 2024 the Combined Pension Plan net actuarial loss balance was $1.4 billion with 64% subject to amortization over an average remaining service period of 13 years and 36% indefinitely deferred.
Depending on the facts and circumstances, we typically estimate the fair value of our reporting units by considering either or both of (i) a discounted cash flow method, which is based on the present value of projected cash flows over a discrete projection period and a terminal value, which is based on the expected normalized cash flows of the reporting units following the discrete projection period, and (ii) a market approach, which includes the use of multiples of publicly-traded companies whose services are comparable to ours.
Fair Value Estimation Depending on the facts and circumstances, we typically estimate the fair value of our reporting units by considering either or both of (i) a discounted cash flow method and (ii) a market approach. 59 Table of Contents Discounted Cash Flow Method Under the discounted cash flow method, we estimate fair value by calculating the present value of projected cash flows over a discrete period plus a terminal value based on normalized future cash flows. • Cash flow projections : Derived from estimates developed from our long-range plan, informed by industry trends — including wireline-specific factors — competitive landscape, product lifecycles, operational initiatives, and capital allocation strategies.
Prior to their divestitures in 2023 and 2022, the EMEA and LATAM regions were also each considered their own reporting unit. 51 Table of Contents Our reporting units are not discrete legal entities with discrete full financial statements.
Prior to the Mass Markets Fiber-to-the-Home business divestiture, we had three reporting units for goodwill testing: Mass Markets, NA Business, and APAC. Prior to the divestiture in 2023, the EMEA region was considered its own reporting unit. Our reporting units are not discrete legal entities with discrete full financial statements.
We evaluate our discretionary capital expenditure projects based on a variety of factors, including expected strategic impacts (such as forecasted impact on revenue growth, productivity, expenses, service levels and customer retention) and our expected return on investment.
Capital Expenditures We regularly invest in capital projects to expand and improve services, enhance and modernize networks, fulfill contractual obligations, and strengthen our competitive position. Discretionary projects are evaluated based on strategic impact such as revenue growth, productivity, service levels, customer retention, and expected return on investment.
We believe that our 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.
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. 58 Table of Contents Goodwill and Intangible Assets Historically, we had a significant amount of goodwill and have intangible assets that are assessed at least annually for impairment.
As of December 31, 2024, we had approximately $737 million of borrowing capacity available under our approximately $1.0 billion of revolving credit facilities, net of undrawn letters of credit issued to us thereunder. We typically use our revolving credit facilities as a source of liquidity for operating activities and our other cash requirements.
See Note 7 — Long-Term Debt and Credit Facilities in Item 8 for additional information on our outstanding debt securities. Short-term Liquidity Needs As of December 31, 2025, we held cash and cash equivalents of $1.0 billion and had approximately $722 million of borrowing capacity available under our $954 million revolving credit facilities, net of undrawn letters of credit.
The remainder of the declines were principally attributable to declines in traditional VPN services of $314 million and $261 million, respectively, and declines in Ethernet services of $117 million and $112 million, respectively. • Harvest decreased by $408 million and $732 million, respectively, approximately $70 million and $370 million of which was associated with the sale of the divested businesses.
This was primarily as a result of: ◦ a decrease of $88 million from the sale of the divested business in 2023; ◦ a decrease of $314 million principally attributable to declines in traditional VPN services; and ◦ a decrease of $117 million from declines in Ethernet services. • Harvest decreased $211 million in 2025.
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.
Valuation Allowances We establish valuation allowances when it is more likely than not that some or all deferred tax assets will not be realized. This assessment considers recent pre-tax earnings, forecasts of future earnings, and the timing and nature of deductions and benefits, all of which involve the exercise of significant judgment.
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.
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 15 — Income Taxes in Item 8 for additional details. 63 Table of Contents
Income Taxes 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 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.
As described further in Note 11—Employee Benefits, aggregate benefits paid by us under these plans (net of participant contributions and direct subsidy receipts) were $185 million, $194 million and $210 million for the years ended December 31, 2024, 2023 and 2022, respectively.
Aggregate benefits paid under these plans, net of participant contributions and subsidies, were $172 million, $185 million, and $194 million for 2025, 2024, and 2023, respectively. In 2026, we currently expect to pay directly $181 million of post-retirement benefits, net of participant contributions and direct subsidies.
As of December 31, 2024, we have not accrued for any such potential costs and will only accrue when such costs are probable and reasonably estimable.
As of December 31, 2025, we have not recorded any accruals for such costs and will only accrue such costs when they become probable and reasonably estimable. For more information on related litigation and risks, see Note 17 — Commitments, Contingencies and Other Items in Item 8 and “Risk Factors” in Item 1A.
For the year ended December 31, 2024 compared to December 31, 2023 this decrease was primarily driven by (i) a decrease of $209 million due to the above-mentioned sale of the EMEA business and select CDN contracts in 2023, (ii) a $166 million reduction in overall network expense and (iii) a decrease of $138 million in employee-related costs.
This was primarily as a result of: • a decrease of $277 million in overall network expense; and • a decrease of $86 million in employee-related costs due to lower headcount. Business segment expense decreased $580 million in 2024 compared to 2023.
These projected cash flows consider recent historical results and are consistent with our short-term financial forecasts and long-term business strategies. Due to inherent uncertainties, actual cash flows could vary significantly from our projected cash flows.
These projections consider recent historical results and are consistent with our short-term financial forecasts and long-term business strategies. • Discount rate : Determined using a weighted average cost of capital, reflecting market participant assumptions for cost of equity and after-tax cost of debt, and incorporating risks inherent in the projections. • Terminal value : Represents expected normalized cash flows beyond the discrete projection period. • Uncertainty : Actual cash flows may differ significantly from projections due to inherent uncertainties.
Years Ended December 31, $ Change 2024 2023 (Dollars in millions) Net cash provided by operating activities $ 4,333 2,160 2,173 Net cash used in investing activities (2,830) (1,201) 1,629 Net cash used in financing activities (1,851) (18) 1,833 Operating Activities Net cash provided by operating activities increased by $2.2 billion for the year ended December 31, 2024 as compared to the year ended December 31, 2023 primarily due to (i) cash payments received in the third quarter of 2024 pursuant to our recent sales of PCF solutions and (ii) our federal income tax cash refund of $729 million, including interest, received in the first quarter of 2024.
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 $ 4,738 4,333 405 Net cash used in investing activities (4,305) (2,830) 1,475 Net cash used in financing activities (1,319) (1,851) (532) Operating Activities Net cash provided by operating activities increased $405 million in 2025 compared to 2024.
We occasionally make voluntary contributions to our plans in addition to required contributions and reserve the right to do so in the future. We made a voluntary contribution of $170 million to the trust for the Combined Pension Plan during 2024. We currently do not expect to make a voluntary contribution in 2025.
Future contribution requirements will depend on factors such as investment performance, interest rates, demographics, plan changes, and funding regulations. We may make voluntary contributions; none were made in 2025. We made a voluntary contribution to the trust for the Combined Pension Plan of $101 million in January 2026 and $170 million in 2024.
In addition to the Lumen Combined Pension Plan, we also maintain several non-qualified pension plans for certain eligible highly compensated employees. Due to the insignificant impact of these non-qualified plans on our consolidated financial statements, we have excluded them from the following pension and post-retirement benefits disclosures for 2024, 2023 and 2022. See Note 11—Employee Benefits for additional information.
Non-qualified plans are excluded from the disclosures below due to their immaterial impact on consolidated results. We also provide post-retirement health care and life insurance benefits to certain eligible retirees. See Note 11 — Employee Benefits in Item 8 for detailed plan descriptions, funding status, and investment strategies.
We do not currently intend to repatriate to the United States any material amounts of our foreign cash and cash equivalents from operating entities. Our senior leadership team and our Board of Directors review our sources and potential uses of cash in connection with our annual budgeting process and throughout the year as circumstances warrant.
Other than excess foreign cash held in India, we do not currently intend to repatriate to the United States material amounts of our foreign cash and cash equivalents. See Note 15 — Income Taxes for additional information. We regularly review liquidity and capital allocation strategies with senior management and the Board of Directors, adjusting as strategies and conditions change.
With respect to our analysis using the market approach, we estimate the fair value of a reporting unit based upon a market multiple applied to the reporting unit’s revenue and EBITDA, adjusted for an appropriate control premium based on recent market transactions. We weigh these revenue and EBITDA market multiples depending on the characteristics of the individual reporting unit.
Market Approach Under the market approach, we estimate fair value of a reporting unit based upon market multiples applied to the reporting unit’s revenue and EBITDA, adjusted for an appropriate control premium based on recent market transactions. • Market multiples : Derived using publicly traded companies whose services and operating characteristics are comparable to ours. • Revenue and EBITDA : Derived using actual results and estimates and assumptions related to the forecasted results for the remainder of the year, including revenues, expenses, and the achievement of certain strategic initiatives. • Weighting : Revenue and EBITDA multiples are weighted based on the characteristics of each reporting unit. • Control premium : Our implied control premium is a factor used to evaluate our fair value assessment and is evaluated for reasonableness, as described in the "Reconciliation" bullet below.
The remainder of the decline was principally attributable to a $252 million and $265 million decline, respectively, in legacy voice and private line services. • Other decreased by $159 million and $25 million, respectively.
This was primarily as a result of: ◦ a decrease of $70 million from the sale of the divested business in 2023; and ◦ a decrease of $252 million from declines in legacy voice services and private line services. • Other decreased $21 million in 2025.
In 2022, approximately 62% of the Combined Pension Plan's January 1, 2022 net actuarial loss balance of $2.2 billion was subject to amortization as a component of net periodic expense over the average remaining service period of 14 years for participating employees expected to receive benefits under the plan.
These gains and losses are recorded in Other Comprehensive Income and amortized into earnings over time. As of January 1, 2025, the Combined Pension Plan net actuarial loss balance was $1.4 billion with 65% subject to amortization over an average remaining service period of 9 years and 35% indefinitely deferred.
In accordance with generally accepted accounting principles, these arrangements are reflected in the balance sheets of our subsidiaries but are eliminated in consolidation and therefore not recognized on our consolidated balance sheets.
In accordance with GAAP, these balances are reflected on the subsidiaries’ balance sheets but eliminated in consolidation and therefore do not appear on our consolidated balance sheet. For additional information, see “Risk Factors” in Item 1A. Our network includes a limited number of legacy lead-sheathed copper cables.
For each reporting unit, we compare its estimated fair value of equity to the carrying value of equity that we assign to the reporting unit. If the estimated fair value of the reporting unit is greater than its carrying value, we conclude that no impairment exists.
Reporting units share assets and liabilities, which are allocated based on relative revenue or EBITDA. These allocations can materially affect fair value estimates. For each reporting unit, we compare its estimated fair value of equity to the carrying value of equity that we assign to the reporting unit.
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 this report.
Future changes in these 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.
For the year ended December 31, 2024 compared to December 31, 2023, we saw growth in IP services of $107 million and an increase in revenue from dark fiber and conduit of $112 million, partially offset by declines in other products, including declines in wavelength services by $42 million.
This was primarily as a result of: ◦ a decrease of $272 million from the sale of the divested business in 2023; ◦ a decrease of $42 million in revenue from wavelength services; ◦ an offsetting increase of $112 million in revenue from dark fiber and conduit; and ◦ an offsetting increase of $107 million from growth in IP services. • Nurture decreased $458 million in 2025.
For additional information on our goodwill balances by segment and results of our impairment analyses, 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 additional information on our goodwill balances by segment and results of our impairment analyses, see Note 3 — Goodwill and Intangible Assets in Item 8. 60 Table of Contents Pension and Post-retirement Benefits We sponsor a noncontributory qualified defined benefit pension plan (the “Combined Pension Plan”), and several non-qualified pension plans for certain eligible highly compensated employees.
Our capital expenditures continue to be focused on enhancing network operating efficiencies, developing new services, and expanding our fiber network, including our Quantum Fiber buildout plan. A portion of our 2025 capital expenditures will also be focused on replacing aged network assets.
Capital spending is influenced by demand, contractual and regulatory requirements, cash flow, and resource availability. We expect capital spending to be focused on: • expanding our fiber network, including our other network capacity buildout plan; • modernizing and enhancing network efficiency and reliability; • developing new services; and • replacing aging network assets.
These NOLs are primarily related to federal NOLs we acquired through the Level 3 Communications, Inc. acquisition on November 1, 2017 and are subject to limitations under Section 382. We maintain a Section 382 rights agreement designed to safeguard through late 2026 our ability to use those NOLs.
A portion of the NOLs are subject to annual usage limits under Section 382 of the Internal Revenue Code. We have a Section 382 Rights Agreement in place through late 2026 to help preserve our ability to use these NOLs.
Business segment adjusted EBITDA as a percentage of revenue was 52%, 52% and 55% for the years ended December 31, 2024, 2023 and 2022. 49 Table of Contents Mass Markets Segment Years Ended December 31, Percent Change 2024 2023 2022 2024 vs 2023 2023 vs 2022 (Dollars in millions) Mass Markets Product Categories: Fiber Broadband $ 736 637 604 16 % 5 % Other Broadband 1,167 1,395 2,163 (16) % (36) % Voice and Other 842 942 1,612 (11) % (42) % Total Mass Markets Segment Revenue 2,745 2,974 4,379 (8) % (32) % Expenses: Total expense 1,292 1,457 1,769 (11) % (18) % Total adjusted EBITDA $ 1,453 1,517 2,610 (4) % (42) % Year ended December 31, 2024 compared to the year ended December 31, 2023 and the year ended December 31, 2023 compared to the year ended December 31, 2022.
This was primarily as a result of: • a decrease of $209 million from the sale of the EMEA business and select CDN contracts in 2023; • a decrease of $166 million in overall network expense; and • a decrease of $138 million in employee-related costs. 47 Table of Contents Business Segment Adjusted EBITDA As a percentage of revenue, Business segment adjusted EBITDA was: Years Ended December 31, 2025 2024 2023 Segment adjusted EBITDA as a percent of segment revenue 46 % 45 % 45 % Mass Markets Segment Years Ended December 31, Percent Change 2025 2024 2023 2025 vs 2024 2024 vs 2023 (Dollars in millions) Mass Markets Product Categories: Fiber Broadband $ 883 735 637 20 % 15 % Other Broadband 950 1,168 1,394 (19) % (16) % Voice and Other 674 839 940 (20) % (11) % Total Mass Markets Segment Revenue 2,507 2,742 2,971 (9) % (8) % Expenses: Total expense 1,111 1,246 1,415 (11) % (12) % Total adjusted EBITDA $ 1,396 1,496 1,556 (7) % (4) % Mass Markets Segment Revenue Mass Markets segment revenue decreased $235 million in 2025 compared to 2024 and decreased by $229 million in 2024 compared to 2023.
Amortization expense increased by $13 million for the year ended December 31, 2024 as compared to the year ended December 31, 2023. The increase was due to a $43 million increase associated with the accelerated amortization of software assets, mostly related to CDN contracts, and a $15 million increase associated with net increases in amortizable assets.
Amortization decreased $63 million in 2025 compared to 2024. This was primarily as a result of: • a decrease of $45 million from accelerated amortization of software assets in 2024; and • a decrease of $24 million associated with a net reduction in amortizable assets.
Financing Activities Net cash used in financing activities increased by $1.8 billion for the year ended December 31, 2024 as compared to the year ended December 31, 2023 due to the substantially greater payments of long-term debt and associated debt extinguishment costs and fees, partially offset by proceeds from issuance of long-term debt in 2024.
This was primarily as a result of: • an increase in net proceeds from issuance of long-term debt in 2025; • an offsetting increase in net payments of long-term debt and revolving debt in 2025 compared to 2024; and • an offsetting increase in debt extinguishment costs and fees, driven by the debt transactions in 2025 compared to those in 2024 described elsewhere herein.
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.
Certain policies and estimates are considered critical because they involve significant judgments and assumptions and could materially impact our financial statements. These include: • goodwill and intangible assets; • pension and post-retirement benefits; • loss contingencies; and • income taxes.
This decrease was primarily due to a decrease of $440 million as a result of the sale of the EMEA business in the fourth quarter of 2023 and a reduction of $147 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 and a portion of our ILEC business.
This was primarily as a result of: • a decrease of $62 million in employee-related costs due to lower headcount; • a decrease of $20 million in overall network expense; • a decrease of $18 million in marketing and advertising expense; and • a decrease of $15 million decrease in professional fees.
Percentage point change Increase/(decrease) in Benefit Obligation at December 31, 2024 (Dollars in millions) Combined Pension Plan discount rate 1 % $ (325) (1) % 374 Post-retirement benefit plans discount rate 1 % (133) (1) % 133 Published mortality rates help predict the expected life of plan participants and are based on historical demographic studies by the Society of Actuaries ("SOA").
Percentage point change Increase/(decrease) in Benefit Obligation as of December 31, 2025 (Dollars in millions) Combined Pension Plan discount rate 1 % $ (316) (1) % 362 Post-retirement benefit plans discount rate 1 % (125) (1) % 125 Similarly, changes in mortality assumptions or asset return expectations could significantly affect net periodic benefit cost and other comprehensive income.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The information in "Management's Discussion and Analysis of Financial Condition and Results of Operations—Market Risk" in Item 7 of Part II of this report is incorporated herein by reference. 62 Table of Contents
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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK As of December 31, 2025, we are exposed to market risk primarily from changes in interest rates on our variable-rate long-term debt obligations and from fluctuations in certain foreign currencies. Interest Rate Risk Our management periodically reviews our exposure to interest rate fluctuations and implements strategies to manage this risk.
Added
From time to time, we have used derivative instruments to convert variable interest rates to fixed rates. We maintain policies and procedures governing risk assessment, approval, reporting, and monitoring of derivative activities. As of December 31, 2025, we did not hold or issue derivative financial instruments for trading or speculative purposes.
Added
As of December 31, 2025, we had approximately $5.9 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 $59 million.
Added
Foreign Currency Risk We conduct a small portion of our business in currencies other than the U.S. dollar, the currency in which our consolidated financial statements are reported. Prior to the November 1, 2023 divestiture of our EMEA business, certain former European subsidiaries used local currencies as their functional currency.
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Although we continue to evaluate strategies to mitigate risks related to fluctuations in currency exchange rates, we expect to continue recognizing gains or losses from international transactions. Accordingly, changes in foreign currency rates relative to the U.S. dollar could positively or negatively impact our operating results. 64 Table of Contents

Other LUMN 10-K year-over-year comparisons