Revenue from Contracts with Customers |
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| Revenue from Contracts with Customers | Note 9 – Revenue from Contracts with Customers Disaggregation of Revenue We provide wireless communications and broadband services to a variety of customers, but focus primarily on two categories: •Postpaid generally includes customers that are qualified to pay after receiving service utilizing phones, 5G broadband gateways, fiber connections, mobile internet devices (including tablets and hotspots), wearables, DIGITS and other connected devices (including SyncUP and IoT); and •Prepaid generally includes customers that pay for service in advance. We also provide services to wholesale customers which include Machine-to-Machine and Mobile Virtual Network Operator customers that operate on our network but are managed by wholesale partners. The balances presented in each revenue line item on our Condensed Consolidated Statements of Comprehensive Income represent categories of revenue from contracts with customers disaggregated by type of product and service. Postpaid and prepaid service revenues also include revenues earned for providing premium services to customers, such as device insurance services. Contract Balances The contract asset and contract liability balances from contracts with customers as of March 31, 2026 and December 31, 2025, were as follows:
Contract assets primarily represent revenue recognized for equipment sales with promotional bill credits offered to customers that are paid over time and are contingent on the customer maintaining a service contract. The change in the contract asset balance reflects customer activity related to new promotions, offset by billings on existing contracts and impairment, which is recognized as bad debt expense. The current portion of our contract assets of $1.0 billion and $920 million as of March 31, 2026 and December 31, 2025, respectively, was included in Other current assets on our Condensed Consolidated Balance Sheets. Contract liabilities are recorded when fees are collected, or we have an unconditional right to consideration (a receivable) in advance of delivery of goods or services. Changes in contract liabilities are primarily related to the activity of prepaid customers and contract liabilities assumed in the UScellular Acquisition. Contract liabilities are primarily included in Deferred revenue on our Condensed Consolidated Balance Sheets. Revenues for the three months ended March 31, 2026 and 2025, include the following:
Remaining Performance Obligations As of March 31, 2026, the aggregate amount of the transaction price allocated to remaining service performance obligations for postpaid contracts with subsidized devices and promotional bill credits that result in an extended service contract is $2.8 billion. We expect to recognize revenue as the service is provided on these postpaid contracts, generally over a period of 24 months from the time of origination. Information about remaining performance obligations that are part of a contract that has an original expected duration of one year or less has been excluded from the above, which primarily consists of monthly service contracts. Certain of our wholesale, roaming and service contracts include variable consideration based on usage and performance. This variable consideration has been excluded from the disclosure of remaining performance obligations. As of March 31, 2026, the aggregate amount of the contractual minimum consideration for wholesale, roaming and service contracts is $986 million, $968 million and $2.2 billion for the remainder of 2026, 2027, and 2028 and beyond, respectively. These contracts have a remaining duration ranging from less than one year to six years. Contract Costs The balance of deferred incremental costs to obtain contracts with customers was $2.0 billion for both March 31, 2026 and December 31, 2025, and is included in Other assets on our Condensed Consolidated Balance Sheets. Deferred contract costs incurred to obtain postpaid service contracts are amortized over a period of 24 months. The amortization period is monitored to reflect any significant change in assumptions. Amortization of deferred contract costs included in Selling, general and administrative expenses on our Condensed Consolidated Statements of Comprehensive Income were $473 million and $485 million for the three months ended March 31, 2026 and 2025, respectively. The deferred contract cost asset is assessed for impairment on a periodic basis. There were no impairment losses recognized on deferred contract cost assets for the three months ended March 31, 2026 and 2025.
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