Segment Information (Tables)

6 Months Ended

Jun. 30, 2017

Segment Reporting [Abstract]

Schedule of segment results

The results of our two reportable segments, enterprise and consumer, are summarized below:

	Three Months Ended June 30,					Six Months Ended June 30,
	2017			2016		2017		2016
	(Dollars in millions)
Total reportable segment revenues	$	3,617		3,929		7,385		7,860
Total reportable segment expenses	1,877			2,011		3,807		3,941
Total reportable segment income	$	1,740		1,918		3,578		3,919
Total margin percentage	48		%	49	%	48	%	50	%
Enterprise segment:
Revenues	$	2,215		2,435		4,571		4,877
Expenses	1,285			1,372		2,615		2,691
Income	$	930		1,063		1,956		2,186
Margin percentage	42		%	44	%	43	%	45	%
Consumer segment:
Revenues	$	1,402		1,494		2,814		2,983
Expenses	592			639		1,192		1,250
Income	$	810		855		1,622		1,733
Margin percentage	58		%	57	%	58	%	58	%

Schedule of operating revenues by products and services

Our operating revenue detail for our products and services consisted of the following categories:

	Three Months Ended June 30,			Six Months Ended June 30,
	2017		2016	2017	2016
	(Dollars in millions)
Strategic services
Enterprise high-bandwidth data services (1)	$	760	753	1,529	1,491
Other enterprise strategic services (2)	225		328	553	655
IT and managed services (3)	162		161	314	323
Consumer broadband services (4)	661		682	1,322	1,349
Other consumer strategic services (5)	107		118	210	225
Total strategic services revenues	1,915		2,042	3,928	4,043
Legacy services
Enterprise voice services (6)	558		611	1,131	1,233
Enterprise low-bandwidth data services (7)	302		352	616	717
Other enterprise legacy services (8)	247		269	502	544
Consumer voice services (6)	562		615	1,137	1,249
Other consumer legacy services (9)	71		79	144	159
Total legacy services revenues	1,740		1,926	3,530	3,902
Data integration
Enterprise data integration	123		122	240	237
IT and managed services data integration	9		1	10	1
Consumer data integration	1		—	1	1
Total data integration revenues	133		123	251	239
Other revenues
High-cost support revenue (10)	168		173	336	347
Other revenue (11)	134		134	254	268
Total other revenues	302		307	590	615
Total revenues	$	4,090	4,398	8,299	8,799

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(1)	Includes MPLS and Ethernet revenue
(2)	Includes primarily colocation, broadband, VOIP, video and fiber lease revenue
(3)	Includes primarily IT services, managed hosting, cloud hosting and hosting area network revenue
(4)	Includes broadband and related services revenue
(5)	Includes video and other revenue
(6)	Includes local and long-distance voice revenue
(7)	Includes private line (including special access) revenue
(8)	Includes UNEs, public access, switched access and other ancillary revenue
(9)	Includes other ancillary revenue
(10)	Includes CAF Phase 1, CAF Phase 2 and federal and state USF support revenue
(11)	Includes USF surcharges and failed-sale-leaseback rental income

Reconciliation of operating profit (loss) from segments to consolidated net income

The following table reconciles total reportable segment income to net income:

	Three Months Ended June 30,					Six Months Ended June 30,
	2017			2016		2017		2016
	(Dollars in millions)
Total reportable segment income	$	1,740		1,918		3,578		3,919
Non-reportable segment revenues	171			162		324		324
Other operating revenues	302			307		590		615
Depreciation and amortization	(949		)	(987	)	(1,829	)	(1,963	)
Other operating expenses	(897		)	(753	)	(1,665	)	(1,560	)
Total other expense, net	(327		)	(330	)	(651	)	(638	)
Income before income tax expense	40			317		347		697
Income tax expense	(23		)	(121	)	(167	)	(265	)
Net income	$	17		196		180		432