QWEST CORP

RESULTS OF OPERATIONS

The following table summarizes the results of our consolidated operations:

Operating Revenue

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

Operating revenue decreased $171 million. The following were the primary drivers within each revenue category:

•Other Broadband revenue decreased $39 million. This was primarily as a result of:

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

•Voice and Other revenue decreased $18 million. This was primarily as a result of:

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

•Fiber Broadband revenue decreased $59 million. This was primarily as a result of:

◦fewer Mass Market subscribers as a result of the Mass Markets Fiber-to-the-Home divestiture, as further described above.

•Strategic revenue increased $5 million. This was primarily as a result of:

◦an increase of $4 million in revenue from dark fiber.

•Legacy revenue decreased $20 million. This was primarily as a result of:

◦a decrease of $13 million in legacy voice services for Business customers; and

◦a decrease of $4 million in Ethernet services.

•Affiliate Services revenue decreased $40 million. This was primarily as a result of:

◦a decrease of $25 million in employee shared services expense allocated to our affiliates;

◦a decrease of $13 million in Ethernet services and other direct legacy telecommunication services provided to our affiliates; and

◦a decrease of $2 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 $60 million. This was primarily as a result of:

•a decrease of $53 million in employee-related expenses; and

•a decrease of $6 million in network expenses.

Selling, General and Administrative

Selling, general and administrative expenses decreased $11 million. This was primarily as a result of:

•a decrease of $14 million in employee-related expenses;

Net Loss on Sale of Business

For a discussion on the net loss on sale of business that we recognized during the three months ended March 31, 2026, see Note 2—Divestiture.

Operating Expenses - Affiliates

Operating expenses - affiliates increased $40 million. This was primarily as a result of:

•an increase of $34 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 the recently completed Mass Markets Fiber-to-the-Home 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; and

•an increase of $6 million in direct telecommunication services provided to us by affiliates.

Depreciation and Amortization

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

Depreciation decreased $40 million. This was primarily as a result of:

•a decrease of $28 million due to the discontinuation of the depreciation of the tangible assets of the Mass Markets Fiber-to-the-Home business held for sale during the second quarter of 2025; and

•a decrease of $4 million due to a net reduction in depreciable assets;

Amortization decreased $1 million. This was primarily as a result of:

•a decrease in the net amount of amortizable assets.

Other Consolidated Results

The following table summarizes our Total other income (expense), net and Income tax expense:

Interest Expense

Interest expense increased $2 million. This was primarily as a result of:

•a decrease of $5 million in capitalized interest; and

•an offsetting decrease in the average debt due to a 2025 maturity.

Interest Income - Affiliate, Net

Interest income - affiliate increased $22 million. This was primarily as a result of:

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

See Note 7—Affiliate Transactions for more information on these facilities.

Income Tax Expense

Our effective tax rate was as follows:

Our 2026 effective tax rate was driven by tax attributable to nondeductible goodwill from the Mass Markets Fiber-to-the-Home divestiture.