QWEST CORP

Results of Operations

The following table summarizes the results of our consolidated operations for the three and six months ended June 30, 2025 and 2024:

For a discussion of certain trends that impact our business, see the MD&A discussion of trends impacting Lumen's business included in Lumen's reports filed with the SEC, including most recently its Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2025.

Operating Revenue

The following table summarizes our consolidated operating revenue recorded under our revenue categories described in Note 4—Revenue Recognition:

Total operating revenue decreased by $183 million and $353 million, respectively, for the three and six months ended June 30, 2025 as compared to the three and six months ended June 30, 2024. Within each product category, these decreases were primarily due to the following factors:

•Decreases in Other Broadband of $41 million and $88 million, respectively, primarily due to fewer Mass Market customers for our lower speed copper-based broadband services;

•Decreases in Voice and Other of $26 million and $39 million, respectively, principally due to the continued loss of copper-based Mass Market voice customers and a decrease of $11 million due to the relinquishment of our funding received under the FCC's Rural Digital Opportunity Fund (“RDOF”). See the "Liquidity and Capital Resources—Future Contractual Obligations" in Item 2 of Part I below for more information;

•Decreases in Fiber Broadband of $16 million and $29 million, respectively, driven by fewer Mass Market subscribers for our fiber services, primarily as a result of customers migrating to the Quantum Fiber services offered by Lumen (which bills customers for such services and pays us for use of our network in providing such services, as further described below);

•Decreases in Harvest of $17 million and $45 million, respectively, primarily attributable to declines in legacy voice and copper broadband services for Business customers of $20 million and $40 million;

•Decreases in Nurture of $4 million and $9 million, respectively, primarily due to declines in Ethernet services;

•Grow revenues were relatively flat period over period; and

•Decreases in Affiliate Services of $78 million and $142 million, respectively, primarily due to a decrease of $116 million and $198 million in direct legacy telecommunication services provided to our affiliates and a decrease of $3 million and $11 million in employee shared services expense allocated to our affiliates, partially offset by an increase of $40 million and $66 million in fiber broadband services provided to our affiliates.

Operating Expenses

The following table summarizes our consolidated operating expenses:

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

Cost of services and products (exclusive of depreciation and amortization) decreased by $10 million and $26 million, respectively, for the three and six months ended June 30, 2025 as compared to the three and six months ended June 30, 2024. The decrease was primarily due to lower employee-related expenses of $16 million and $36 million partially offset by higher network and facilities expense of $7 million for each respective period.

Selling, General and Administrative

Selling, general and administrative expenses decreased by $22 million and $46 million, respectively, for the three and six months ended June 30, 2025 as compared to the three and six months ended June 30, 2024. For the three months ended June 30, 2025 compared to the three months ended June 30, 2024, the decrease was primarily due to a decrease of $30 million in employee related expenses attributable to lower headcount, partially offset by an increase of $12 million due to fees related to the relinquishment of our funding received under the FCC's RDOF. For the six months ended June 30, 2025 compared to the six months ended June 30, 2024, the decrease was primarily due to a decrease of $36 million in employee related expenses attributable to lower headcount and a decrease of $11 million in bad debt expense, partially offset by an increase of $12 million due to fees related to the relinquishment of our funding received under the FCC's RDOF.

Operating Expenses - Affiliates

Operating expenses - affiliates increased by $15 million and decreased by $12 million, respectively, for the three and six months ended June 30, 2025 as compared to the three and six months ended June 30, 2024. The increase for the three months ended June 30, 2025 as compared to the comparable period in 2024 was primarily due to (i) an increase of $18 million in allocated employee and professional services provided to us by our affiliates and (ii) $4 million of network services purchased from affiliates, partially offset by a decrease of $6 million in direct telecommunication services charged to us by our affiliates. For the six months ended June 30, 2025 compared to the six months ended June 30, 2024, the decrease was primarily due to (i) a decrease of $10 million in direct telecommunication services charged to us by our affiliates and (ii) a decrease of $13 million of network services purchased from affiliates, partially offset by $12 million of higher allocated employee and professional services provided to us by our affiliates.

Depreciation and Amortization

The following table details our depreciation and amortization expense:

Depreciation expense decreased by $10 million and $1 million, respectively, for the three and six months ended June 30, 2025 as compared to the three and six months ended June 30, 2024.These decreases are attributable to a decrease of $15 million for the three and six months ended June 30, 2025, as compared to the three and six months ended June 30, 2024, due to the discontinuation during the second quarter of 2025 of the depreciation of the tangible assets of the Lumen Mass Markets fiber-to-the-home business held for sale. These decreases were partially offset by increases of $6 million and $14 million, respectively, due to net growth in depreciable assets.

Amortization expense decreased by $3 million and $8 million, respectively, for the three and six months ended June 30, 2025 as compared to the three and six months ended June 30, 2024 due to a net decrease in amortizable assets.

Other Consolidated Results

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

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

Interest Expense

Interest expense increased by $10 million and $13 million, respectively, for the three and six months ended June 30, 2025 as compared to the three and six months ended June 30, 2024 primarily due to lower capitalized interest of $10 million and $19 million, which was partially offset by a decrease in our average interest rate from 6.79% to 6.73% for the six months ended June 30, 2025 as compared to the six months ended June 30, 2024.

Interest Income - Affiliate, Net

Interest income - affiliate, net increased by $20 million and $31 million, respectively, for the three and six months ended June 30, 2025 as compared to the three and six months ended June 30, 2024. The increase in interest income - affiliate, net was primarily due to a higher average receivable from affiliates.

Income Tax Expense

For the three and six months ended June 30, 2025, our effective tax rate was 26.7% and 26.3%, respectively. For the three and six months ended June 30, 2024, our effective tax rate was 27.0% and 26.7%, respectively.