QWEST CORP

Overview of Sources and Uses of Cash

We are an indirectly wholly-owned subsidiary of Lumen Technologies, Inc. As such, factors relating to, or affecting, Lumen's liquidity and capital resources could have material impacts on us, including impacts on our credit ratings, our access to capital markets and changes in the financial market's perception of us.

Our primary sources of liquidity are:

•cash from operating activities;

•amounts due to us from Lumen Technologies,

•our ability to refinance our debt obligations; and

•capital contributions, advances, or loans from Lumen Technologies or its affiliates.

Key balances as of December 31, 2025 included:

•Cash and cash equivalents: $39 million

•Note receivable-affiliate: $937 million

•Total consolidated indebtedness: $1.7 billion

As of December 31, 2025, $35 million of our cash and cash equivalents were held in foreign bank accounts for funding our foreign operations. Due to various factors, our access to foreign cash is generally more restricted than our access to domestic cash.

We regularly review liquidity and capital allocation strategies with senior management and the Board of Directors, adjusting as strategies and conditions change.

Based on current assumptions, we believe our liquidity sources — operating cash flows, available cash, and credit capacity — will be sufficient to fund near-term requirements and strategic investments. For additional information on risks that could affect liquidity, see “Risk Factors — Financial Risks” in Item 1A.

We participate in Lumen Technologies, Inc.’s centralized cash‑management and intercompany financing arrangements, under which most of our cash held in U.S. banks is advanced daily to a Lumen service company affiliate for cash management. Under these arrangements affiliates may extend lines of credit to other affiliates. Intercompany lines of credit and other affiliate obligations cause our balances with Lumen and its affiliates to fluctuate.

From time to time, we may declare and pay dividends to QSC, including amounts in excess of current earnings when permitted by law, using cash owed to us under these advances, which reduces the outstanding balance. Our debt covenants do not currently restrict the amount of dividends we can pay to QSC.

A significant component of our liquidity consists of amounts due from Lumen under these arrangements; accordingly, our liquidity depends on Lumen’s ability to repay its obligations to us.

Cash Flow Activities

The following table summarizes our consolidated cash flow activities:

Operating Activities

Net cash provided by operating activities decreased $432 million in 2025 compared to 2024. This was primarily as a result of:

•lower net income adjusted for non-cash income and expenses

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

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

Investing Activities

Net cash used in investing activities decreased $379 million in 2025 compared to 2024. This was primarily as a result of:

•a decrease in advances to affiliates;

•a decrease in capital expenditures; and

•an offsetting increase due to the issuance of a note receivable - affiliate.

Financing Activities

Net cash used in financing activities decreased $49 million in 2025 compared to 2024. This was primarily as a result of:

•a decrease resulting from the timing of repayments of advances from affiliates; and

•an offsetting increase due to higher repayments of debt in 2025 as compared to 2024.

Short-term Liquidity Needs

As of December 31, 2025, we held cash and cash equivalents of $39 million, which together with cash generated from operating activities. This, along with Lumen’s outstanding obligations to us as described above, represent our primary sources of liquidity for the next 12 months. Additionally, we anticipate being assigned a portion of the proceeds from the recently completed Mass Markets Fiber-to-the-Home divestiture from Lumen through our cash management and intercompany arrangements previously described.

Based on our current capital allocation objectives, we project expenditures for the next 12 months to include, among others, the following:

•RDOF relinquishment: $26 million for remittance of awards and associated fees — see "Federal Broadband Support Programs" below for further details.

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

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

Long-term Liquidity Needs

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

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

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

Impact of Strategic Transactions on Liquidity

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

•Recent divestiture: The 2026 Mass Markets Fiber-to-the-Home divestiture generated significant cash proceeds but reduced recurring operating cash flows. The Mass Markets Fiber-to-the-Home divestiture is also expected to reduce Lumen's Mass Markets fiber-related capital expenditures by approximately $1 billion annually. While this transaction is expected to reduce recurring revenue and operating cash flows, we believe it will sharpen our focus on enterprise and fiber growth and deliver significant cash proceeds to strengthen our financial position.

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

Capital Expenditures

We regularly invest in capital projects to expand and improve services, enhance and modernize networks, and strengthen our competitive position. Discretionary projects are evaluated by us and Lumen Technologies based on strategic impact such as revenue growth, productivity, service levels, customer retention, and expected return on investment. Lumen's consolidated 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 investments aim to improve service quality, drive innovation, and position us to meet future demand.

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

Debt Instruments and Financing Arrangements

Debt Instruments

As of December 31, 2025, we had approximately $1.7 billion aggregate outstanding indebtedness (excluding finance leases, unamortized premiums, net, unamortized debt issuance costs, and Note Payable - Affiliate). None of our outstanding debt is due in the next 12 months (excluding finance lease obligations). See the details of our outstanding indebtedness as of December 31, 2025 in Note 7—Long-Term Debt and Note Payable - Affiliate of Item 8.

Future Debt Transactions

Subject to market conditions, and to the extent permitted under applicable debt covenants, Qwest Corporation may issue debt securities from time to time primarily to refinance a portion of our maturing debt. The availability, interest rate and other terms of any new borrowings will depend on the ratings assigned to Qwest Corporation by credit rating agencies, among other factors.

As of the filing date of this report, the credit ratings for Qwest Corporation's senior unsecured debt were as follows:

(1)In February 2026, Moody's and Fitch upgraded our issuer default rating.

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

Note Receivable - Affiliate

On March 31, 2025, we entered into an unsecured revolving promissory note with our ultimate parent company, Lumen Technologies. The note allows Lumen to borrow up to $3.0 billion from us at an annual interest rate of 8.3%. Borrowings are payable on demand and may be prepaid at any time, but no later than March 31, 2030. The note will automatically renew on the maturity date for successive 12-month periods unless we elect otherwise. The facility includes covenants and other limitations.

As of December 31, 2025, we had $937 million owed to us under this promissory note. For more information, see Note 14—Affiliate Transactions.

Note Payable - Affiliate

We are permitted to borrow up to $2.0 billion from our ultimate parent Lumen Technologies under a revolving promissory note. As of December 31, 2025, nothing was due under this promissory note. For more information, see Note 7—Long-Term Debt and Note Payable - Affiliate in Item 8.

Pension and Post-Retirement Benefit Obligations

Lumen Technologies maintains significant pension and post-retirement benefit plans that require ongoing cash outflows and could affect our liquidity and financial flexibility. These obligations are sensitive to market conditions and actuarial assumptions, and adverse changes could increase funding requirements and reduce cash available for other uses.

A substantial portion of our active and retired employees participate in Lumen's qualified pension plan and post-retirement benefit plans. On December 31, 2014, the Qwest Communications International Inc. ("QCII") pension plan and a pension plan of an affiliate were merged into the CenturyLink Retirement Plan, which is now named the Lumen Combined Pension Plan. Our contributions are not segregated or restricted to pay amounts due to our employees and may be used to provide benefits to other employees of our affiliates. Prior to the pension plan merger, the above-noted employees participated in the QCII pension plan.

Current Status

As of December 31, 2025, Lumen's unfunded obligations were:

•Pension plans: $588 million

•Post-retirement plans: $1.7 billion

The expected long-term rate of return on pension assets, net of administrative expenses, was 6.5% for 2025 and is 6.5% for 2026. Actual investment performance may differ substantially from these assumptions, which could influence future funding needs. Lower asset returns or interest rates could increase our obligations and may require

additional contributions, reducing cash available for other uses. For additional details, see “CRITICAL ACCOUNTING ESTIMATES — Pension and Post-retirement Benefits” in Item 7 and Note 11—Employee Benefits in Item 8 and the corresponding note in Lumen’s 2025 Form 10‑K.

Funding and Contributions

Benefits paid by Lumen's qualified pension plan are paid through a trust which holds all of the plan's assets. Based on current laws and circumstances, Lumen does not expect required contributions to their qualified pension plan during 2026. Future contribution requirements will depend on factors such as investment performance, interest rates, demographics, plan changes, and funding regulations.

Lumen makes voluntary contributions; none were made in 2025. Lumen made a voluntary contribution to the trust for the Combined Pension Plan of $101 million in January 2026 and $170 million in 2024. Any required or voluntary contributions could reduce available cash and impact liquidity.

Settlements

Our affiliate obligations primarily represent the cumulative allocation of pension and post‑retirement expenses, net of payments, associated with the former QCII plans prior to their merger into the Lumen Combined Pension Plan in 2014. In 2015, we agreed to settle these obligations over a 30 year term through monthly payments. Under the plan, payments are scheduled to be made on a monthly basis. For the year ended December 31, 2025, we made net settlement payments of $48 million to QCII in accordance with the plan. For the year ended 2026, we expect to make aggregate settlement payments of $44 million to QCII under the plan.

Affiliate obligations, net are reflected in other within Current liabilities and Noncurrent liabilities on our consolidated balance sheets, while changes in the affiliate obligations are reflected in operating activities on our consolidated statements of cash flows.

Post-Retirement Benefits

Substantially all of Lumen's post-retirement health care and life insurance benefits plans are unfunded and are paid by Lumen Technologies with available cash.

Future Contractual Obligations

We maintain obligations related to debt, leases, purchase commitments, and asset retirement. Our estimated future obligations as of December 31, 2025 include:

N/A Item 8 Note Reference not applicable, as no additional disclosure is included.

Dividends

We periodically pay dividends to QSC, our direct parent company, which reduce our capital resources for debt repayments and other purposes. For additional information, see our consolidated statements of cash flows and stockholder's equity and Note 18—Stockholder's Equity in Item 8.

Federal Broadband Support Programs

The FCC's RDOF program aims to support broadband expansion in rural areas throughout America.

Although we initially agreed to participate in the program in certain areas, as previously disclosed, we voluntarily relinquished the entirety of our RDOF awards. As a result, we will no longer receive funding through the RDOF program and recognized a reduction to revenue of $11 million in our consolidated statements of operations in the second quarter of 2025. We also incurred fees totaling $12 million in connection therewith, which are reflected in our operating expenses within our consolidated statements of operations. In January 2026, we paid the $23 million of revenue and fees summarized above, along with an additional $3 million relating to our 2024 relinquishment as repayment of funds previously received and remittance of the fees incurred.

Federal officials continue to advance broadband‑related proposals, and Congress has authorized a $65 billion program to expand broadband affordability and access. State and federal agencies are in the process of implementing these initiatives, and we expect that the release of associated funding may increase competition in newly served markets.

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

Legal Proceedings and Other Contingent Liabilities

We are subject to various legal proceedings and other contingent liabilities that individually or in the aggregate could materially affect our financial condition, future results of operations or cash flows. See Note 15—Commitments, Contingencies and Other Items for additional information.

Our network includes a limited number of legacy lead-sheathed copper cables. 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. 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 15—Commitments, Contingencies and Other Items in Item 8 and “Risk Factors” in Item 1A.

Lumen Technologies is involved in several legal proceedings to which we are not a party that, if resolved against it, could have a material adverse effect on its business and financial condition. As a wholly owned subsidiary of Lumen Technologies, our business and financial condition could be similarly affected. You can find descriptions of these legal proceedings in Lumen's quarterly and annual reports filed with the SEC. Because we are not a party to any of the Lumen matters, we have not accrued any liabilities for these matters as of December 31, 2025.

Tax Law Changes

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

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