Segment Information

12 Months Ended

Dec. 31, 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. As previously disclosed, we plan to update these sales channels beginning with our first quarterly report filed after this annual report. 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 it being sold 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 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 and Summary of Significant Accounting Policies for additional detail on these changes.

The following tables summarize our segment results for 2022, 2021 and 2020 based on the segment categorization we were operating under at December 31, 2022.

	Year Ended December 31, 2022
	Business		Mass Markets	Total Segments	Operations and Other	Total
	(Dollars in millions)
Revenue:	$	13,039	4,439	17,478	—	17,478
Expenses:
Cost of services and products	3,260		123	3,383	4,485	7,868
Selling, general and administrative	1,101		562	1,663	1,415	3,078
Gain on sale of businesses	—		—	—	(773)	(773)
Loss on disposal groups held for sale	—		—	—	700	700
Less: stock-based compensation	—		—	—	(98)	(98)
Total expense	4,361		685	5,046	5,729	10,775
Total adjusted EBITDA	$	8,678	3,754	12,432	(5,729)	6,703

	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	3,488		153	3,641	4,847	8,488
Selling, general and administrative	1,178		539	1,717	1,178	2,895
Less: stock-based compensation	—		—	—	(120)	(120)
Total expense	4,666		692	5,358	5,905	11,263
Total adjusted EBITDA	$	9,453	4,876	14,329	(5,905)	8,424

	Year Ended December 31, 2020
	Business		Mass Markets	Total Segments	Operations and Other	Total
	(Dollars in millions)
Revenue:	$	14,808	5,904	20,712	—	20,712
Expenses:
Cost of services and products	3,661		201	3,862	5,072	8,934
Selling, general and administrative	1,262		581	1,843	1,621	3,464
Less: stock-based compensation	—		—	—	(175)	(175)
Total expense	4,923		782	5,705	6,518	12,223
Total adjusted EBITDA	$	9,885	5,122	15,007	(6,518)	8,489

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 table 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 (loss) income for the years ended December 31, 2022, 2021 and 2020:

	Years Ended December 31,
	2022		2021	2020
	(Dollars in millions)
Total segment adjusted EBITDA	$	12,432	14,329	15,007
Depreciation and amortization	(3,239)		(4,019)	(4,710)
Goodwill impairment	(3,271)		—	(2,642)
Operations and other expenses	(5,729)		(5,905)	(6,518)
Stock-based compensation	(98)		(120)	(175)
Operating income	95		4,285	962
Total other expense, net	(1,086)		(1,584)	(1,744)
(Loss) income before income taxes	(991)		2,701	(782)
Income tax expense	557		668	450
Net (loss) income	$	(1,548)	2,033	(1,232)

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.