Segment Information

9 Months Ended

Sep. 30, 2024

Segment Reporting [Abstract]

Segment Information

Note 10—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 five distinct sales channels: Large Enterprise, Mid-Market Enterprise, Public Sector, Wholesale, and International and Other. For Business segment revenue, we report the following product categories: Grow, Nurture, Harvest, and Other, in each case through the sales channels outlined above. The Business segment included the results of our EMEA business prior to its sale on November 1, 2023.

Under our Mass Markets Segment, we provide products and services to residential and small business customers. We report the following product categories: Fiber Broadband, Other Broadband, and Voice and Other.

See detailed descriptions of these product and service categories in Note 3—Revenue Recognition.

As described in more detail below, our segments are managed based on the direct costs of providing services to applicable customers and directly associated selling, general and administrative costs (primarily salaries and commissions). Shared costs are managed separately and included in "other unallocated expense" in the table below under the heading "— Revenue and Expenses". 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, 2024 and 2023, based on our segment categorization as of September 30, 2024.

	Three Months Ended September 30, 2024			Nine Months Ended September 30, 2024
	Business		Mass Markets	Business	Mass Markets
	(Dollars in millions)
Segment revenue	$	2,536	685	7,704	2,075
Segment expenses:
Cost of services and products	766		16	2,266	53
Selling, general and administrative	453		323	1,407	937
Total segment expense	1,219		339	3,673	990
Total segment adjusted EBITDA	$	1,317	346	4,031	1,085

	Three Months Ended September 30, 2023			Nine Months Ended September 30, 2023
	Business		Mass Markets	Business	Mass Markets
	(Dollars in millions)
Segment revenue	$	2,905	736	8,781	2,259
Segment expenses:
Cost of services and products	825		19	2,428	61
Selling, general and administrative	610		364	1,723	1,038
Total segment expense	1,435		383	4,151	1,099
Total segment adjusted EBITDA	$	1,470	353	4,630	1,160

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 "other unallocated expense" 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 for the three and nine months ended September 30, 2024 and 2023:

	Three Months Ended September 30,			Nine Months Ended September 30,
	2024		2023	2024	2023
	(Dollars in millions)
Total segment adjusted EBITDA	$	1,663	1,823	5,116	5,790
Depreciation and amortization	(707)		(755)	(2,198)	(2,234)
Goodwill impairment	—		—	—	(8,793)
Other unallocated expense	(820)		(829)	(2,591)	(2,532)
Stock-based compensation expense	(10)		(16)	(21)	(39)
Operating income (loss)	126		223	306	(7,808)
Total other expense, net	(298)		(308)	(417)	(287)
Loss before income taxes	(172)		(85)	(111)	(8,095)
Income tax (benefit) expense	(24)		(7)	29	208
Net loss	$	(148)	(78)	(140)	(8,303)