Segment Information

12 Months Ended

Dec. 31, 2021

Segment Reporting [Abstract]

Segment Information

Segment Information

In early 2021, Jeff Storey, our chief executive officer, who serves as chief operating decision maker ("CODM"), made changes to our segment and customer-facing sales channel reporting categories to align with operational changes designed to better support our customers. Since these changes, we have reported two segments: Business and Mass Markets. The Business segment includes four sales channels: International and Global Accounts, Large Enterprise, Mid-Market Enterprise and Wholesale. These changes also include both the creation of new product categories and the realignment of products and services within previously reported product categories to better reflect product life cycles and our go-to-market approach. 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. For Mass Markets segment revenue, we report the following product categories: Consumer Broadband, SBG Broadband, Voice and Other and CAF II. 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 and Summary of Significant Accounting Policies for additional detail on these changes.

At December 31, 2021, we had the following two reportable segments:

•Business Segment: Under our Business segment, we provide our products and services under four distinct sales channels to meet the needs of our enterprise and commercial customers; and

•Mass Markets Segment: Under our Mass Markets segment, we provide products and services to consumer and small business customers.

The following tables summarize our segment results for 2021, 2020 and 2019 based on the segment categorization we were operating under at December 31, 2021.

	Year Ended December 31, 2021
	Business		Mass Markets	Total Segments	Operations and Other	Total
	(Dollars in millions)
Revenue:	$	14,119	5,568	19,687	—	19,687
Expenses:
Cost of services and products	3,484		152	3,636	4,852	8,488
Selling, general and administrative	1,189		530	1,719	1,176	2,895
Less: stock-based compensation	—		—	—	(120)	(120)
Total expense	4,673		682	5,355	5,908	11,263
Total adjusted EBITDA	$	9,446	4,886	14,332	(5,908)	8,424

	Year Ended December 31, 2020
	Business		Mass Markets	Total Segments	Operations and Other	Total
	(Dollars in millions)
Revenue:	$	14,817	5,895	20,712	—	20,712
Expenses:
Cost of services and products	3,649		203	3,852	5,082	8,934
Selling, general and administrative	1,269		574	1,843	1,621	3,464
Less: stock-based compensation	—		—	—	(175)	(175)
Total expense	4,918		777	5,695	6,528	12,223
Total adjusted EBITDA	$	9,899	5,118	15,017	(6,528)	8,489

	Year Ended December 31, 2019
	Business		Mass Markets	Total Segments	Operations and Other	Total
	(Dollars in millions)
Revenue:	$	15,239	6,219	21,458	—	21,458
Expenses:
Cost of services and products	3,598		214	3,812	5,322	9,134
Selling, general and administrative	1,364		630	1,994	1,721	3,715
Less: stock-based compensation	—		—	—	(162)	(162)
Total expense	4,962		844	5,806	6,881	12,687
Total adjusted EBITDA	$	10,277	5,375	15,652	(6,881)	8,771

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 CODM by segment:

•network expenses not incurred as a direct result of providing services and products to segment customers;

•centrally managed expenses such as Finance, Human Resources, Legal, Marketing, Product Management and IT, which are reported as "Other operating expenses" in the table below;

•depreciation and amortization expense;

•goodwill or other impairments;

•interest expense;

•stock-based compensation; and

•other income and expense items are not monitored as a part of our segment operations.

The following table reconciles total segment adjusted EBITDA to net income (loss) for the years ended December 31, 2021, 2020 and 2019:

	Years Ended December 31,
	2021		2020	2019
	(Dollars in millions)
Total segment adjusted EBITDA	$	14,332	15,017	15,652
Depreciation and amortization	(4,019)		(4,710)	(4,829)
Goodwill impairment	—		(2,642)	(6,506)
Operations and other expenses	(5,908)		(6,528)	(6,881)
Stock-based compensation	(120)		(175)	(162)
Operating income (loss)	4,285		962	(2,726)
Total other expense, net	(1,584)		(1,744)	(2,040)
Income (loss) before income taxes	2,701		(782)	(4,766)
Income tax expense	668		450	503
Net income (loss)	$	2,033	(1,232)	(5,269)

We do not have any single customer that comprises more than 10% of our consolidated total operating revenue.

The assets we hold outside of the U.S. represent less than 10% of our total assets. Revenue from sources outside of the U.S. comprises less than 10% of our total operating revenue.