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Segment Information | 9 Months Ended
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Sep. 30, 2022
Segment Reporting [Abstract] |
Segment Information | Segment Information We report our results within two segments: Business and Mass Markets. Under our Business segment we provide products and services to meet the needs of our enterprise and wholesale customers under four distinct sales channels: International and Global Accounts, Large Enterprise, Mid-Market Enterprise and Wholesale. For Business segment revenue, we report the following product categories: Compute and Application Services, IP and Data Services, Fiber Infrastructure Services and Voice and Other, in each case through the sales channels outlined above. The Business segment included the results of our Latin American business prior to the closing of its sale on August 1, 2022. Under our Mass Markets Segment, we provide products and services to residential and small business customers. Following the completion of the FCC's Connect America Fund II ("CAF II") program at December 31, 2021, we recategorized our products used to report our Mass Markets segment revenue and currently use the following categories: Fiber Broadband, Other Broadband and Voice and Other. See detailed descriptions of these product and service categories in Note 4—Revenue Recognition. As described in more detail below, our segments are managed based on the direct costs of providing services to their customers and directly associated selling, general and administrative costs (primarily salaries and commissions). Shared costs are managed separately and included in "Operations and Other" in the tables below. As referenced above, we reclassified certain prior period amounts to conform to the current period presentation. See Note 1— Background for additional detail on these changes. The following tables summarize our segment results for the three and nine months ended September 30, 2022 and 2021, based on the segment categorization we were operating under at September 30, 2022.
| Three Months Ended September 30, 2022
| Business | Mass Markets | Total Segments | Operations and Other | Total
| (Dollars in millions)
Revenue | $ | 3,217 |  | 1,173 |  | 4,390 |  | — |  | 4,390 |
Expenses: |  |  |  |  |
Cost of services and products | 792 |  | 25 |  | 817 |  | 1,182 |  | 1,999 |
Selling, general and administrative | 263 |  | 169 |  | 432 |  | 360 |  | 792 |
Gain on sale of business | — |  | — |  | — |  | (593) |  | (593) |
Less: stock-based compensation | — |  | — |  | — |  | (23) |  | (23) |
Total expense | 1,055 |  | 194 |  | 1,249 |  | 926 |  | 2,175 |
Total adjusted EBITDA | $ | 2,162 |  | 979 |  | 3,141 |  | (926) |  | 2,215 |
| Three Months Ended September 30, 2021
| Business | Mass Markets | Total Segments | Operations and Other | Total
| (Dollars in millions)
Revenue | $ | 3,508 |  | 1,379 |  | 4,887 |  | — |  | 4,887 |
Expenses: |  |  |  |  |
Cost of services and products | 867 |  | 36 |  | 903 |  | 1,248 |  | 2,151 |
Selling, general and administrative | 293 |  | 128 |  | 421 |  | 233 |  | 654 |
Less: stock-based compensation | — |  | — |  | — |  | (27) |  | (27) |
Total expense | 1,160 |  | 164 |  | 1,324 |  | 1,454 |  | 2,778 |
Total adjusted EBITDA | $ | 2,348 |  | 1,215 |  | 3,563 |  | (1,454) |  | 2,109 |
| Nine Months Ended September 30, 2022
| Business | Mass Markets | Total Segments | Operations and Other | Total
| (Dollars in millions)
Revenue | $ | 10,034 |  | 3,644 |  | 13,678 |  | — |  | 13,678 |
Expenses: |  |  |  |  |
Cost of services and products | 2,452 |  | 91 |  | 2,543 |  | 3,499 |  | 6,042 |
Selling, general and administrative | 845 |  | 439 |  | 1,284 |  | 1,123 |  | 2,407 |
Gain on sale of business | — |  | — |  | — |  | (593) |  | (593) |
Less: stock-based compensation | — |  | — |  | — |  | (71) |  | (71) |
Total expense | 3,297 |  | 530 |  | 3,827 |  | 3,958 |  | 7,785 |
Total adjusted EBITDA | $ | 6,737 |  | 3,114 |  | 9,851 |  | (3,958) |  | 5,893 |
| Nine Months Ended September 30, 2021
| Business | Mass Markets | Total Segments | Operations and Other | Total
| (Dollars in millions)
Revenue | $ | 10,625 |  | 4,215 |  | 14,840 |  | — |  | 14,840 |
Expenses: |  |  |  |  |
Cost of services and products | 2,614 |  | 119 |  | 2,733 |  | 3,669 |  | 6,402 |
Selling, general and administrative | 892 |  | 415 |  | 1,307 |  | 865 |  | 2,172 |
Less: stock-based compensation | — |  | — |  | — |  | (89) |  | (89) |
Total expense | 3,506 |  | 534 |  | 4,040 |  | 4,445 |  | 8,485 |
Total adjusted EBITDA | $ | 7,119 |  | 3,681 |  | 10,800 |  | (4,445) |  | 6,355 |
Revenue and Expenses Our segment revenue includes all revenue from our two segments as described in more detail above. Our segment revenue is based upon each customer's classification. We report our segment revenue based upon all services provided to that segment's customers. Our segment expenses include specific cost of service expenses incurred as a direct result of providing services and products to segment customers, along with selling, general and administrative expenses that are directly associated with specific segment customers or activities. We have not allocated assets or debt to specific segments. The following items are excluded from our segment results, because they are centrally managed and not monitored by or reported to our chief operating decision maker by segment: •network expenses not incurred as a direct result of providing services and products to segment customers and centrally managed expenses such as Finance, Human Resources, Legal, Marketing, Product Management and IT, all of which are reported as "Operations and Other" in the tables above, and "Operations and other expenses" in the tables below; •depreciation and amortization expense; •goodwill or other impairments; •interest expense; •stock-based compensation; and •other income and expense items. The following table reconciles total segment adjusted EBITDA to net income for the three and nine months ended September 30, 2022 and 2021:
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2022 |  | 2021 |  | 2022 |  | 2021
| (Dollars in millions)
Total segment adjusted EBITDA | $ | 3,141 |  |  | 3,563 |  |  | 9,851 |  |  | 10,800 |
Operations and other expenses | (926) |  |  | (1,454) |  |  | (3,958) |  |  | (4,445) |
Depreciation and amortization | (808) |  |  | (951) |  |  | (2,443) |  |  | (3,142) |
Stock-based compensation | (23) |  |  | (27) |  |  | (71) |  |  | (89) |
Operating income | 1,384 |  |  | 1,131 |  |  | 3,379 |  |  | 3,124 |
Total other expense, net | (447) |  |  | (415) |  |  | (1,188) |  |  | (1,102) |
Income before income taxes | 937 |  |  | 716 |  |  | 2,191 |  |  | 2,022 |
Income tax expense | 359 |  |  | 172 |  |  | 670 |  |  | 497 |
Net income | $ | 578 |  |  | 544 |  |  | 1,521 |  |  | 1,525 |

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 31 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8924-108599 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 34 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8981-108599 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 21 -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8721-108599 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 40 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e9031-108599 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (f) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8933-108599 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (e) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8933-108599 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 26 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8844-108599 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 41 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e9038-108599 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (d) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8933-108599 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 22 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8736-108599 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 42 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e9054-108599 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 15 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8657-108599 Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 21 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8721-108599 Reference 14: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -URI https://asc.fasb.org/topic&trid=2134510 + Details
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