QWEST CORP

RESULTS OF OPERATIONS

The following table summarizes the results of our consolidated operations for the years ended December 31, 2025 and 2024:

Operating Revenue

The following table summarizes our consolidated operating revenue recorded under our revenue categories as described in Note 4—Revenue Recognition in Item 8:

Operating revenue decreased $760 million in 2025 compared to 2024. The following were the primary drivers within each revenue category:

•Other Broadband decreased $170 million in 2025. This was primarily as a result of:

◦fewer Mass Market customers for our low speed copper-based broadband services.

•Voice and Other decreased $74 million in 2025. This was primarily as a result of:

◦the continued loss of copper-based Mass Market voice customers; and

◦a decrease of $11 million due to the voluntary relinquishment of our funding received under the FCC's Rural Digital Opportunity Fund (“RDOF”) in the second quarter of 2025. See the "Liquidity and Capital Resources—Federal Broadband Support Programs" below for more information.

•Fiber Broadband decreased $63 million in 2025. This was primarily as a result of:

◦fewer Mass Market subscribers for our fiber services, primarily resulting from 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).

•Harvest decreased $108 million in 2025. This was primarily as a result of:

◦a decrease of $64 million in legacy voice services for Business customers; and

◦a decrease of $39 million in legacy private line services.

•Nurture decreased $27 million in 2025. This was primarily as a result of:

◦a decrease of $30 million in Ethernet services.

•Grow decreased $4 million in 2025, which was relatively flat period over period.

•Affiliate Services decreased $314 million in 2025. This was primarily as a result of:

◦a decrease of $303 million in wavelengths services provided to our affiliates;

◦a decrease of $77 million in Ethernet services and other direct legacy telecommunication services provided to our affiliates; and

◦an offsetting increase of $67 million in fiber broadband services provided to our affiliates.

Operating Expenses

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

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

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

Cost of services and products (exclusive of depreciation and amortization) decreased $56 million in 2025 compared to 2024. This was primarily as a result of:

•a decrease of $78 million in employee-related expenses; and

•an offsetting increase of $24 million in network expenses.

Selling, General and Administrative

Selling, general and administrative expenses increased $18 million in 2025 compared to 2024. This was primarily as a result of:

•an increase of $21 million from the sale of operating assets and associated gain recognized in the fourth quarter of 2024;

•an increase of $13 million in professional fees;

•an increase of $12 million in fees related to our voluntary relinquishment of FCC Rural Digital Opportunity Fund (“RDOF”) funding in the second quarter of 2025; and

•an offsetting decrease of $11 million in bad debt expense.

Net Loss on Disposal Group Held for Sale

For a discussion of the loss on the disposal group held for sale that we recognized for the year ended December 31, 2025, see Note 2—Divestiture in Item 8.

Operating Expenses-Affiliates

Operating expenses - affiliates increased $159 million in 2025 compared to 2024. This was primarily as a result of:

•an increase of $166 million in allocated employee and corporate expense provided to us by our affiliates which includes the impact of (i) higher overall professional fees related to our recently completed divestiture and ongoing modernization and simplification strategies (ii) increased employee-related expenses and (iii) the impact of ongoing adjustments to the basis for allocations of cost shared amongst affiliates in normal course of business;

•an offsetting decrease of $9 million in direct telecommunication services provided to us by affiliates

Depreciation and Amortization

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

Depreciation decreased $60 million in 2025 compared to 2024. This was primarily as a result of:

•a decrease of $69 million due to the discontinuation of the depreciation of the tangible assets of the Lumen Mass Markets Fiber-to-the-Home business held for sale during the second quarter of 2025; and

•an offsetting increase of $9 million in net growth in depreciable assets;

Amortization decreased $8 million in 2025 compared to 2024. This was primarily as a result of:

•a decrease in the net amount of amortizable assets.

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.

When we performed a qualitative impairment test during the fourth quarter of 2025, and concluded the estimated fair value of our equity was less than our carrying value of equity at October 31, 2025. As a result, we recorded a non-cash, non-tax-deductible goodwill impairment charge of $2.0 billion on October 31, 2025.

During the second quarter of 2025, we determined that the classification of the Lumen Mass Markets Fiber-to-the-Home business in the Territory as held for sale, as described in Note 2—Divestiture, was considered an event or change in circumstance which required an assessment of our goodwill for impairment as of April 30, 2025. Based on our assessments performed, the estimated fair value of our equity exceeded our carrying value of equity and therefore concluded that we had no impairment as of our April 30, 2025 assessment date.

For a discussion of the goodwill impairment we recognized in 2025, see Note 3—Goodwill and Intangible Assets in Item 8.

Other Consolidated Results

The following table summarizes 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 $29 million in 2025 compared to 2024. This was primarily as a result of:

•a decrease of $40 million decrease in capitalized interest;

•an offsetting decrease in average interest rate from 6.75% to 6.70%; and

•an offsetting decrease in average outstanding long-term debt of $150 million.

Interest Income - Affiliate, Net

Interest income - affiliate increased $65 million in 2025 compared to 2024. This was primarily as a result of:

•a higher average receivable from affiliate, inclusive of our note-receivable - affiliates.

See Note 14—Affiliate Transactions in Item 8 for more information on these facilities.

Income Tax Expense

For 2025 and 2024, our effective income tax rate was (36.1)% and 26.2%, respectively. The effective tax rate for 2025 includes $421 million of unfavorable impact due to a non-deductible goodwill impairment.

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