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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-Q



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|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------

For the quarterly period ended June 30, 2007

or



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

For the transition period from
                     to

Commission File No. 001-03040



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QWEST CORPORATION

(Exact name of registrant as specified in its charter)



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|                                                              |  |                                    
|------------------------------------------------------------- |  | -----------------------------------
|Colorado                                                      |  | 84-0273800                         
|(State or other jurisdiction ofincorporation or organization) |  | (I.R.S. EmployerIdentification No.)
|                                                              | 
|1801 California Street, Denver, Colorado                      |  | 80202                              
|(Address of principal executive offices)                      |  | (Zip Code)                         

(303) 992-1400

(Registrants telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)



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THE REGISTRANT, A WHOLLY OWNED
SUBSIDIARY OF QWEST COMMUNICATIONS INTERNATIONAL INC., MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTIONS H(1) (a) AND (b) OF FORM 10-Q AND IS THEREFORE FILING THIS FORM WITH REDUCED DISCLOSURE FORMAT.

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of
accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act. (Check One):

Large accelerated
filer ̈Accelerated filer ̈Non-accelerated filer  x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes ̈No  x

On July 31, 2007, one share of Qwest Corporation common stock was outstanding.



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QWEST CORPORATION

FORM 10-Q

TABLE OF CONTENTS



|                             |  |                                                                                                               |  |   
|---------------------------- |  | ------------------------------------------------------------------------------------------------------------- |  | --
|Glossary of Terms            |  | ii                                                                                                           
|                             | 
|PART IFINANCIAL INFORMATION |  |                                                                                                              
|                             |  |                                                                                                              
|Item 1.                      |  | Financial Statements                                                                                          |  | 1 
|                             |  |                                                                                                              
|                             |  | Condensed Consolidated Statements of OperationsThree and six months ended June 30, 2007 and 2006 (unaudited) |  | 1 
|                             |  |                                                                                                              
|                             |  | Condensed Consolidated Balance SheetsJune 30, 2007 and December 31, 2006 (unaudited)                         |  | 2 
|                             |  |                                                                                                              
|                             |  | Condensed Consolidated Statements of Cash FlowsSix months ended June 30, 2007 and 2006 (unaudited)           |  | 3 
|                             |  |                                                                                                              
|                             |  | Notes to Condensed Consolidated Financial Statements (unaudited)                                              |  | 4 
|                             |  |                                                                                                              
|Item 2.                      |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                         |  | 15
|                             |  |                                                                                                              
|Item 3.                      |  | Quantitative and Qualitative Disclosures About Market Risk                                                    |  | 26
|                             |  |                                                                                                              
|Item 4.                      |  | Controls and Procedures                                                                                       |  | 26
|                             | 
|PART IIOTHER INFORMATION    |  |                                                                                                              
|                             |  |                                                                                                              
|Item 1.                      |  | Legal Proceedings                                                                                             |  | 27
|                             |  |                                                                                                              
|Item 1A.                     |  | Risk Factors                                                                                                  |  | 27
|                             |  |                                                                                                              
|Item 6.                      |  | Exhibits                                                                                                      |  | 34
|                             | 
|Signature                    |  | 36                                                                                                           



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GLOSSARY OF TERMS

Our industry uses many terms and acronyms that may not be familiar to you. To assist you in
reading this document and other documents we file with the Securities and Exchange Commission, we have provided below definitions of some of these terms.



| |  |  | Access Lines. Telephone lines reaching from the customers premises to a connection with the public switched telephone network. When we refer to our
access lines we mean all our mass markets, wholesale and business access lines, including those used by us and our affiliates.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Asynchronous Transfer Mode (ATM). A broadband, network transport service utilizing data switches that provides a fast, efficient way to move large quantities
of information.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Broadband services (previously referred to as high-speed Internet access).Services used to connect to the Internet and private networks. For Qwest, this
technology allows our existing telephone lines to operate at higher speeds than dial-up access, thereby giving customers faster connections necessary to access data and video content.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Competitive Local Exchange Carriers (CLECs). Telecommunications providers that compete with us in providing local voice and other services in our local
service area.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Data Integration. Voice and data telecommunications customer premises equipment and associated professional services. These services include network
management, installation and maintenance of data equipment and building of proprietary fiber-optic broadband networks for our governmental and business customers.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Dedicated Internet Access (DIA). Internet access ranging from 128 kilobits per second to 2.5 gigabits per second.
| | - |  | -----------------------------------------------------------------------------------------------------------------



| |  |  | Frame Relay. A high speed data switching technology primarily used to interconnect multiple local networks.
| | - |  | -----------------------------------------------------------------------------------------------------------



| |  |  | Incumbent Local Exchange Carrier (ILEC). A traditional telecommunications provider that, prior to the Telecommunications Act of 1996, had the exclusive right
and responsibility for providing local telecommunications services in its local service area. Qwest Corporation is an ILEC.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Integrated Services Digital Network (ISDN). A telecommunications standard that uses digital transmission technology to support voice, video and data
communications applications over regular telephone lines.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | InterLATA long-distance services. Telecommunications services, including 800 services, that cross LATA boundaries.
| | - |  | --------------------------------------------------------------------------------------------------------------------



| |  |  | Internet Dial Access. Provides ISPs and business customers with a comprehensive, reliable and cost-effective dial-up network infrastructure.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Internet Protocol (IP). Those protocols that facilitate transferring information in packets of data and that enable each packet in a transmission to
tell the data switches it encounters where it is headed and enables the computers on each end to confirm that message has been accurately transmitted and received.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Internet Service Providers (ISPs). Businesses that provide Internet access to retail customers.
| | - |  | -----------------------------------------------------------------------------------------------



| |  |  | IntraLATA long-distance services. These services include calls that terminate outside a customers local calling area but within the customers
LATA, including wide area telecommunications service or 800 services for customers with geographically highly concentrated demand.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Local Access Transport Area (LATA). A geographical area associated with the provision of telecommunications services by local exchange and long distance
carriers. There are 163 LATAs in the United States, of which 27 are in our 14 state local service area.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| |  |  | Local Calling Area. A geographical area, usually smaller than a LATA, within which a customer can make telephone calls without incurring long-distance
charges. Multiple local calling areas generally make up a LATA.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Multi-Protocol Label Switching (MPLS). A standards-approved data networking technology, compatible with existing ATM and frame relay networks that can
deliver the quality of service required to support real-time voice and video, as well as service level agreements that guarantee bandwidth. MPLS is deployed by many telecommunications providers and large enterprises for use in their own national
networks.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Private Line. Direct circuit or channel specifically dedicated to the use of an end-user organization for the purpose of directly connecting two or more
sites.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Public Switched Telephone Network (PSTN). The worldwide voice telephone network that is accessible to every person with a telephone equipped with dial tone.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Unbundled Network Elements (UNEs). Discrete elements of our network that are sold or leased to competitive telecommunications providers and that may be
combined to provide their retail telecommunications services.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Virtual Private Network (VPN). A private network that operates securely within a public network (such as the Internet) by means of encrypting transmissions.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Voice over Internet Protocol (VoIP). An application that provides real-time, two-way voice communication similar to our traditional voice that originates in
the Internet protocol over a broadband connection and often terminates on the PSTN.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Web Hosting. The providing of space, power, bandwidth and managed services in data centers.
| | - |  | -------------------------------------------------------------------------------------------



| |  |  | Wide Area Network (WAN). A communications network that covers a wide geographic area, such as a state or country. A WAN typically extends a local area
network outside the building, over telephone common carrier lines to link to other local area networks in remote locations, such as branch offices or at-home workers and telecommuters.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

QWEST CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)



|                                                                |  |                            |       |      |                           |       |      |  |      |       |  |   |       |  
|--------------------------------------------------------------- |  | -------------------------- | ----- | ---- | ------------------------- | ----- | ---- |  | ---- | ----- |  | - | ----- | -
|                                                                |  | Three Months EndedJune 30, |       |      | Six Months Ended June 30, |      
|                                                                |  | 2007                       |       | 2006 |                           |       | 2007 |  | 2006 |      
|                                                                |  | (Dollars in millions)      |      
|Operating revenue:                                              |  |                            |       |      |                           |       |      |  |      |       |  |   |       |  
|Operating revenue                                               |  | $                          | 2,210 |      | $                         | 2,221 |      |  | $    | 4,404 |  | $ | 4,462 |  
|Operating revenueaffiliates                                    |  |                            | 291   |      |                           | 239   |      |  |      | 555   |  |   | 476   |  
|                                                                |  |                            |       |      |                           |       |      |  |      |       |  |   |       |  
|Total operating revenue                                         |  |                            | 2,501 |      |                           | 2,460 |      |  |      | 4,959 |  |   | 4,938 |  
|                                                                |  |                            |       |      |                           |       |      |  |      |       |  |   |       |  
|Operating expenses:                                             |  |                            |       |      |                           |       |      |  |      |       |  |   |       |  
|Cost of sales (exclusive of depreciation and amortization)      |  |                            | 484   |      |                           | 525   |      |  |      | 958   |  |   | 1,043 |  
|Cost of salesaffiliates                                        |  |                            | 56    |      |                           | 49    |      |  |      | 114   |  |   | 109   |  
|Selling, general and administrative                             |  |                            | 423   |      |                           | 457   |      |  |      | 821   |  |   | 886   |  
|Selling, general and administrativeaffiliates                  |  |                            | 249   |      |                           | 267   |      |  |      | 479   |  |   | 539   |  
|Depreciation and amortization                                   |  |                            | 521   |      |                           | 592   |      |  |      | 1,043 |  |   | 1,188 |  
|                                                                |  |                            |       |      |                           |       |      |  |      |       |  |   |       |  
|Total operating expenses                                        |  |                            | 1,733 |      |                           | 1,890 |      |  |      | 3,415 |  |   | 3,765 |  
|                                                                |  |                            |       |      |                           |       |      |  |      |       |  |   |       |  
|Other expense (income)net:                                     |  |                            |       |      |                           |       |      |  |      |       |  |   |       |  
|Interest expense on long-term borrowings and capital leasesnet |  |                            | 148   |      |                           | 156   |      |  |      | 301   |  |   | 309   |  
|Othernet                                                       |  |                            | 22    |      |                           | (3    | )    |  |      | 20    |  |   | (4    | )
|                                                                |  |                            |       |      |                           |       |      |  |      |       |  |   |       |  
|Total other expense (income)net                                |  |                            | 170   |      |                           | 153   |      |  |      | 321   |  |   | 305   |  
|                                                                |  |                            |       |      |                           |       |      |  |      |       |  |   |       |  
|Income before income taxes                                      |  |                            | 598   |      |                           | 417   |      |  |      | 1,223 |  |   | 868   |  
|Income tax expense                                              |  |                            | 232   |      |                           | 154   |      |  |      | 465   |  |   | 321   |  
|                                                                |  |                            |       |      |                           |       |      |  |      |       |  |   |       |  
|Net income                                                      |  | $                          | 366   |      | $                         | 263   |      |  | $    | 758   |  | $ | 547   |  
|                                                                |  |                            |       |      |                           |       |      |  |      |       |  |   |       |  

The accompanying notes are an integral part of these condensed consolidated financial statements.



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QWEST CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)



|                                                                                         |  |                       |        |   |                  |   |        |  
|---------------------------------------------------------------------------------------- |  | --------------------- | ------ | - | ---------------- | - | ------ | -
|                                                                                         |  | June 30,    2007      |        |   | December 31,2006 |  
|                                                                                         |  | (Dollars in millions) |       
|ASSETS                                                                                   |  |                       |        |   |                  |   |        |  
|Current assets:                                                                          |  |                       |        |   |                  |   |        |  
|Cash and cash equivalents                                                                |  | $                     | 392    |   |                  | $ | 274    |  
|Short-term investments                                                                   |  |                       | 95     |   |                  |   | 42     |  
|Accounts receivablenet of allowance of $53 as of each date                              |  |                       | 965    |   |                  |   | 1,035  |  
|Accounts receivableaffiliates                                                           |  |                       | 77     |   |                  |   | 147    |  
|Deferred income taxes                                                                    |  |                       | 173    |   |                  |   | 180    |  
|Prepaid expenses and other                                                               |  |                       | 163    |   |                  |   | 177    |  
|                                                                                         |  |                       |        |   |                  |   |        |  
|Total current assets                                                                     |  |                       | 1,865  |   |                  |   | 1,855  |  
|                                                                                         |  |                      
|Property, plant and equipmentnet                                                        |  |                       | 12,452 |   |                  |   | 12,995 |  
|Capitalized softwarenet                                                                 |  |                       | 390    |   |                  |   | 419    |  
|Prepaid pensionaffiliates                                                               |  |                       | 954    |   |                  |   | 962    |  
|Other                                                                                    |  |                       | 230    |   |                  |   | 239    |  
|                                                                                         |  |                       |        |   |                  |   |        |  
|Total assets                                                                             |  | $                     | 15,891 |   |                  | $ | 16,470 |  
|                                                                                         |  |                       |        |   |                  |   |        |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                     |  |                       |        |   |                  |   |        |  
|Current liabilities:                                                                     |  |                       |        |   |                  |   |        |  
|Current portion of long-term borrowings                                                  |  | $                     | 1      |   |                  | $ | 71     |  
|Accounts payable                                                                         |  |                       | 375    |   |                  |   | 392    |  
|Accounts payableaffiliates                                                              |  |                       | 354    |   |                  |   | 418    |  
|Dividends payableQSC                                                                    |  |                       | 200    |   |                  |   | 200    |  
|Accrued expenses and other                                                               |  |                       | 694    |   |                  |   | 782    |  
|Accrued expenses and other primarily related to employee benefitsaffiliates             |  |                       | 175    |   |                  |   | 176    |  
|Deferred revenue and advance billings                                                    |  |                       | 448    |   |                  |   | 463    |  
|                                                                                         |  |                       |        |   |                  |   |        |  
|Total current liabilities                                                                |  |                       | 2,247  |   |                  |   | 2,502  |  
|                                                                                         |  |                      
|Long-term borrowingsnet of unamortized debt discount of $119 and $126, respectively     |  |                       | 7,867  |   |                  |   | 7,610  |  
|Deferred revenue                                                                         |  |                       | 176    |   |                  |   | 173    |  
|Deferred income taxes                                                                    |  |                       | 1,486  |   |                  |   | 1,673  |  
|Other                                                                                    |  |                       | 282    |   |                  |   | 220    |  
|Other primarily related to post-retirement and other post-employment benefitsaffiliates |  |                       | 2,527  |   |                  |   | 2,562  |  
|                                                                                         |  |                       |        |   |                  |   |        |  
|Total liabilities                                                                        |  |                       | 14,585 |   |                  |   | 14,740 |  
|                                                                                         |  |                       |        |   |                  |   |        |  
|Commitments and contingencies (Note 5)                                                   |  |                       |        |   |                  |   |        |  
|                                                                                         |  |                      
|Stockholders equity:                                                                    |  |                       |        |   |                  |   |        |  
|Common stockone share without par value, owned by QSC                                   |  |                       | 10,375 |   |                  |   | 10,346 |  
|Accumulated deficit                                                                      |  |                       | (9,069 | ) |                  |   | (8,616 | )
|                                                                                         |  |                       |        |   |                  |   |        |  
|Total stockholders equity                                                               |  |                       | 1,306  |   |                  |   | 1,730  |  
|                                                                                         |  |                       |        |   |                  |   |        |  
|Total liabilities and stockholders equity                                               |  | $                     | 15,891 |   |                  | $ | 16,470 |  
|                                                                                         |  |                       |        |   |                  |   |        |  

The accompanying notes are an integral part of these condensed consolidated financial statements.



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QWEST CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)



|                                                                                  |  |                          |        |   |      |   |       |  
|--------------------------------------------------------------------------------- |  | ------------------------ | ------ | - | ---- | - | ----- | -
|                                                                                  |  | Six Months EndedJune 30, |       
|                                                                                  |  | 2007                     |        |   | 2006 |  
|                                                                                  |  | (Dollars in millions)    |       
|Operating activities:                                                             |  |                          |        |   |      |   |       |  
|Net income                                                                        |  | $                        | 758    |   |      | $ | 547   |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                          |        |   |      |   |       |  
|Depreciation and amortization                                                     |  |                          | 1,043  |   |      |   | 1,188 |  
|Provision for bad debtnet                                                        |  |                          | 36     |   |      |   | 35    |  
|Deferred income taxes                                                             |  |                          | (106   | ) |      |   | (193  | )
|Other non-cash chargesnet                                                        |  |                          | 18     |   |      |   | 4     |  
|Changes in operating assets and liabilities:                                      |  |                          |        |   |      |   |       |  
|Accounts receivable                                                               |  |                          | 34     |   |      |   | 7     |  
|Accounts receivableaffiliates                                                    |  |                          | 70     |   |      |   | 9     |  
|Prepaid expenses and other current assets                                         |  |                          | 15     |   |      |   | 8     |  
|Accounts payable and accrued expenses and other current liabilities               |  |                          | (111   | ) |      |   | (108  | )
|Accounts payable and accrued expenses and other current liabilitiesaffiliates    |  |                          | (79    | ) |      |   | (56   | )
|Deferred revenue and advance billings                                             |  |                          | (12    | ) |      |   | (25   | )
|Other non-current assets and liabilities including affiliates                     |  |                          | (15    | ) |      |   | 20    |  
|                                                                                  |  |                          |        |   |      |   |       |  
|Cash provided by operating activities                                             |  |                          | 1,651  |   |      |   | 1,436 |  
|                                                                                  |  |                          |        |   |      |   |       |  
|Investing activities:                                                             |  |                          |        |   |      |   |       |  
|Expenditures for property, plant and equipment and capitalized software           |  |                          | (458   | ) |      |   | (624  | )
|Interest in net purchases of investments managed by QSC                           |  |                          | (53    | ) |      |   |      |  
|Proceeds from sale of property and equipment                                      |  |                          |       |   |      |   | 27    |  
|Other                                                                             |  |                          | 9      |   |      |   | (1    | )
|                                                                                  |  |                          |        |   |      |   |       |  
|Cash used for investing activities                                                |  |                          | (502   | ) |      |   | (598  | )
|                                                                                  |  |                          |        |   |      |   |       |  
|Financing activities:                                                             |  |                          |        |   |      |   |       |  
|Proceeds from long-term borrowings                                                |  |                          | 500    |   |      |   |      |  
|Repayments of long-term borrowings, including current maturities                  |  |                          | (320   | ) |      |   |      |  
|Dividends paid to QSC                                                             |  |                          | (1,200 | ) |      |   | (896  | )
|Other                                                                             |  |                          | (11    | ) |      |   |      |  
|                                                                                  |  |                          |        |   |      |   |       |  
|Cash used for financing activities                                                |  |                          | (1,031 | ) |      |   | (896  | )
|                                                                                  |  |                          |        |   |      |   |       |  
|Cash and cash equivalents:                                                        |  |                          |        |   |      |   |       |  
|Increase (decrease) in cash and cash equivalents                                  |  |                          | 118    |   |      |   | (58   | )
|Beginning balance                                                                 |  |                          | 274    |   |      |   | 160   |  
|                                                                                  |  |                          |        |   |      |   |       |  
|Ending balance                                                                    |  | $                        | 392    |   |      | $ | 102   |  
|                                                                                  |  |                          |        |   |      |   |       |  

The accompanying notes are an integral part of these condensed consolidated financial statements.



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QWEST CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Six Months Ended June 30, 2007

(Unaudited)

Unless the context requires otherwise, references in this report to QC
refer to Qwest Corporation, references to Qwest, we, us, the Company and our refer to Qwest Corporation and its consolidated subsidiaries, and references to QCII refer to our
ultimate parent company, Qwest Communications International Inc., and its consolidated subsidiaries.

Note 1: Basis of Presentation

These condensed consolidated interim financial statements are unaudited and are prepared in accordance with the instructions for
Form 10-Q. In compliance with those instructions, certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of
America (GAAP) have been condensed or omitted.

In the opinion of management, these statements include all adjustments
necessary to fairly present our condensed consolidated results of operations, financial position and cash flows as of June 30, 2007 and for all periods presented. These condensed consolidated financial statements should be read in conjunction
with the audited consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2006. The condensed consolidated results of operations for the three and six months
ended June 30, 2007 and the condensed consolidated statement of cash flows for the six months ended June 30, 2007 are not necessarily indicative of the results or cash flows expected for the full year or of the results we would have
incurred had we operated as a stand-alone entity during the periods presented.

In February 2007, the Federal Communications Commission
issued an order that freed us from some regulatory obligations under the Telecommunications Act of 1996. Among other things, the order gives us more flexibility to integrate our local operations with QCIIs long-distance operations and gives
QCII more flexibility to integrate the operations of its subsidiaries that provide shared services to us and QCIIs other subsidiaries. In light of this order and consistent with QCIIs continuing strategy to streamline and simplify its
corporate structure to gain operational efficiencies, QCII may engage in mergers, dissolutions and operational consolidations affecting one or more of its subsidiaries, including us. We do not expect these changes to adversely affect our
consolidated financial condition or results of operations. However, in future periods our financial statements may be substantially different from the financial statements we have historically presented.

We have reclassified certain prior period balances to conform to the current period presentation.

Use of Estimates

Our condensed consolidated
financial statements are prepared in accordance with GAAP. These accounting principles require us to make certain estimates, judgments and assumptions. We believe that the estimates, judgments and assumptions made when accounting for items and
matters such as, but not limited to, long-term contracts, customer retention patterns, allowance for bad debts, depreciation, amortization, asset valuations, internal labor capitalization rates, recoverability of assets, impairment assessments,
employee benefits, taxes, reserves and other provisions and contingencies are reasonable, based on information available at the time they are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities
as of the date of the condensed consolidated financial statements, as well as the reported amounts of revenue and expenses during the periods presented. We also assess potential losses in relation to threatened or pending legal and tax matters. See
Note 5Commitments and Contingencies.



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QWEST CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

For the Three and Six Months
Ended June 30, 2007

(Unaudited)



For matters not related to income taxes, if a loss is considered probable and the amount can be
reasonably estimated, we recognize an expense for the estimated loss. If we have the potential to recover a portion of the estimated loss from a third party, we make a separate assessment of recoverability and reduce the estimated loss if recovery
is also deemed probable.

Effective January 1, 2007, our policy for accounting for income taxes changed upon adoption of Financial
Accounting Standards Board (FASB) Interpretation No. 48, Accounting for Uncertainty in Income Taxes (FIN 48). See Note 2Adoption of FIN 48 for further discussion.

Actual results could differ from our estimates.

USF,
Gross Receipts Taxes and Other Surcharges

Our revenue and expenses include taxes and surcharges that we recognize on a gross basis
of $54 million and $104 million for the three and six months ended June 30, 2007, respectively, and $67 million and $134 million for the three and six months ended June 30, 2006, respectively.

Depreciation and Amortization

Property, plant
and equipment is shown net of accumulated depreciation on our condensed consolidated balance sheets. Accumulated depreciation was $30.973 billion and $30.477 billion as of June 30, 2007 and December 31, 2006, respectively.

Capitalized software is shown net of accumulated amortization on our condensed consolidated balance sheets. Accumulated amortization was $856 million and
$830 million as of June 30, 2007 and December 31, 2006, respectively. Effective January 1, 2007, as a result of an internal study, we changed our estimates of the average economic lives for capitalized software from between four and
five years to between four and seven years. For the three and six months ended June 30, 2007, amortization expense would have been higher by $22 million and $45 million, respectively, had we not changed our estimates of the average
economic lives.

Recently Adopted Accounting Pronouncements

Effective January 1, 2007, we adopted FIN 48. See Note 2Adoption of FIN 48 for additional information.

Effective January 1, 2007, we adopted FASB Statement of Financial Accounting Standard (SFAS) No. 156, Accounting for Servicing of Financial Assets (SFAS No. 156). SFAS No. 156 requires
us to initially measure all separately recognized servicing assets and liabilities at fair value and permits, but does not require, the subsequent measurement of servicing assets and liabilities at fair value. The adoption of SFAS No. 156 has
not had a material effect on our financial position or results of operations.

Recently Issued Accounting Pronouncements

In February 2007, the FASB issued SFAS No. 159, Fair Value Option for Financial Assets and Financial Liabilities (SFAS
No. 159). Under SFAS No. 159, entities may choose to measure at fair value many financial instruments and certain other items that are not currently required to be measured at fair value. SFAS No. 159 also establishes
recognition, presentation, and disclosure requirements designed to facilitate comparisons between entities that choose different measurement attributes for similar types of assets and liabilities. SFAS



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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

For the Three and Six Months
Ended June 30, 2007

(Unaudited)



No. 159 does not affect any existing accounting literature that requires certain assets and liabilities to be carried at fair value. SFAS No. 159
is effective for us beginning January 1, 2008. At this time, we do not expect the adoption of this standard to have any impact on our financial position or results of operations.

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements, which is effective for us beginning January 1, 2008 and
provides a definition of fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements for future transactions. We do not expect the adoption of this standard to have a material impact on our
financial position or results of operations.

Note 2: Adoption of FIN 48

Effective January 1, 2007, we adopted FIN 48. The validity of any tax position is a matter of tax law, and generally there is no controversy
about recognizing the benefit of a tax position in a companys financial statements. The tax law is, however, subject to varied interpretations, and whether a tax position will ultimately be sustained may be uncertain. Prior to January 1,
2007, the impact of an uncertain tax position that did not create a difference between the financial statement basis and the tax basis of an asset or liability and that would have future tax consequences was included in our income tax provision if
it was probable the position would be sustained upon audit. The benefit of any uncertain tax position that created a basis difference in an asset or liability was reflected in our tax provision if it was more likely than not that the position would
be sustained upon audit. Prior to the adoption of FIN 48, we recognized interest expense based on our estimates of the ultimate outcomes of the uncertain tax positions. Under FIN 48, the impact of an uncertain tax position that is more likely
than not of being sustained upon audit by the relevant taxing authority must be recognized at the largest amount that is more likely than not to be sustained. No portion of an uncertain tax position will be recognized if the position in the
aggregate has less than a 50% likelihood of being sustained. Also, under FIN 48, interest expense is recognized on the full amount of deferred benefits for uncertain tax positions.

We are included in the consolidated federal income tax returns and the combined state income tax returns of QCII. QCII treats our consolidated results as
if we were a separate taxpayer. This policy requires us to pay our tax liabilities in cash based upon separate return taxable income.

On
January 1, 2007, we recorded the following FIN 48 transition adjustments:



| |  |  | $67 million increase in our tax liabilities for uncertain tax positions for items previously presented in deferred tax liabilities;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------



| |  |  | $19 million increase in interest accrued for uncertain tax positions and a corresponding $8 million increase in deferred tax asset; and
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------



| |  |  | $11 million increase in accumulated deficit.
| | - |  | --------------------------------------------

As of January 1, 2007, we had a total liability of $43 million for interest. During the three and six months ended June 30, 2007, we increased our liability for uncertain tax positions by $3 million and $6 million, respectively,
as a result of additional interest accruals. In accordance with our accounting policy, both before and after adoption of FIN 48, interest expense and penalties related to income taxes are included in the othernet line of our condensed
consolidated statements of operations. As of January 1, 2007, we had unrecognized tax benefits of $132 million.



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QWEST CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

For the Three and Six Months
Ended June 30, 2007

(Unaudited)



QCII is included in the coordinated industry case program of the Internal Revenue Service
(IRS) and therefore the IRS examines all of QCIIs federal income tax returns. As of June 30, 2007, all of the federal income tax returns QCII has filed since 1998 are still subject to adjustment upon audit. QCII also files
combined income tax returns in many states, and these combined returns remain open for adjustments to its federal income tax returns. In addition, certain combined state income tax returns QCII has filed since 1994 are still open for state specific
adjustments.

QCII has a tentative settlement with the IRS related to audits for the tax years 1998 through 2001. This settlement is
subject to final calculation of QCIIs liability, QCIIs acceptance of the calculation and formal approval of the settlement by the IRS and the Joint Committee on Taxation of the U.S. Congress. If the settlement is effected in accordance
with our expectations, our total unrecognized tax benefits may decrease by approximately $75 million by December 31, 2007.

Note 3: Borrowings

As of June 30, 2007 and December 31, 2006, our borrowings, net of discounts and premiums, consisted of the following:



|                                             |  |                       |       |                  |   |      
|-------------------------------------------- |  | --------------------- | ----- | ---------------- | - | -----
|                                             |  | June 30,      2007    |       | December 31,2006
|                                             |  | (Dollars in millions)
|Current borrowings:                          |  |                       |       |                  |   |      
|Current portion of long-term notes           |  | $                     |      |                  | $ | 70   
|Current portion of capital lease obligations |  |                       | 1     |                  |   | 1    
|                                             |  |                       |       |                  |   |      
|Total current borrowings                     |  | $                     | 1     |                  | $ | 71   
|                                             |  |                       |       |                  |   |      
|Long-term borrowings:                        |  |                       |       |                  |   |      
|Long-term notes                              |  | $                     | 7,860 |                  | $ | 7,603
|Long-term capital lease obligations          |  |                       | 7     |                  |   | 7    
|                                             |  |                       |       |                  |   |      
|Total long-term borrowings                   |  | $                     | 7,867 |                  | $ | 7,610
|                                             |  |                       |       |                  |   |      

On May 16, 2007, we issued $500 million aggregate principal amount of notes that bear
interest at 6.5% per year and are due in 2017. The notes are unsecured obligations and rank equally in right of payment with all of our other unsecured and unsubordinated indebtedness. The covenant and default terms are substantially the same
as those associated with our other long-term debt. We plan to file an exchange offer registration statement with the Securities and Exchange Commission (SEC) for a new issue of substantially identical notes registered under the
Securities Act of 1933, as amended, within 315 calendar days of the date of issuance of the original notes. If we fail to file this registration statement or fail to satisfy other obligations under the registration rights agreement relating to
the notes, we will be required to pay additional interest on the notes at a rate of 25 basis points per year.

On June 4, 2007, we redeemed $250 million aggregate principal amount of our 87/8% Debentures due June 1, 2031. The extinguishment resulted in a loss on early retirement of debt of $18 million.

On June 7, 2007, we redeemed $70 million aggregate principal amount of our 6.0% Notes due 2007.



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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

For the Three and Six Months
Ended June 30, 2007

(Unaudited)



Note 4: Contribution to QCII Segments

Our operations are integrated into and are part of the segments of the QCII consolidated group. We have the same chief operating decision maker
(CODM) as the consolidated group. The CODM makes resource allocation decisions and assessments of financial performance for the consolidated group based on QCIIs wireline services, wireless services and other services segments. Our
business contributes to QCIIs wireline services and other services segments. QCIIs CODM reviews our financial information only in connection with our quarterly and annual reports that we file with the SEC. Consequently, we do not provide
our discrete financial information to the CODM on a regular basis.

We generate revenue from the provision of voice services, data,
Internet and video services and other services, as well as from the provision of services to our affiliates.



| |  |  | Voice services. Voice services include local voice services, IntraLATA long-distance voice services and access services. Local voice services include basic
local exchange, switching and enhanced voice services. Local voice services also include network transport, billing services and providing access to our local network through our wholesale channel. Access services include fees we charge to other
telecommunications providers to connect their customers and their networks to our network.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Data, Internet and video services. We offer data and Internet services to our mass markets, business and wholesale customers. We also offer broadband
services and resold satellite digital television to our mass markets customers.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Affiliate and other services. We provide to our affiliates billing and collection, marketing and advertising and other support services. In addition, we
provide to our affiliates local voice, access and data services that we also provide to external customers. Other services include the sublease of space in our office buildings, warehouses and other properties.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Revenue derived from external customers for the three and six months ended June 30, 2007 and 2006 is summarized in the following table:



|                                  |  |                            |       |                           |   |       |  |      |       |  |   |      
|--------------------------------- |  | -------------------------- | ----- | ------------------------- | - | ----- |  | ---- | ----- |  | - | -----
|                                  |  | Three Months EndedJune 30, |       | Six Months Ended June 30,
|                                  |  | 2007                       |       | 2006                      |   | 2007  |  | 2006
|                                  |  | (Dollars in millions)     
|Operating revenue:                |  |                            |       |                           |   |       |  |      |       |  |   |      
|Voice services                    |  | $                          | 1,484 |                           | $ | 1,586 |  | $    | 2,973 |  | $ | 3,206
|Data, Internet and video services |  |                            | 721   |                           |   | 630   |  |      | 1,422 |  |   | 1,246
|Other services                    |  |                            | 5     |                           |   | 5     |  |      | 9     |  |   | 10   
|                                  |  |                            |       |                           |   |       |  |      |       |  |   |      
|Total operating revenue           |  | $                          | 2,210 |                           | $ | 2,221 |  | $    | 4,404 |  | $ | 4,462
|                                  |  |                            |       |                           |   |       |  |      |       |  |   |      

While revenue from affiliates provided approximately 11% of our total operating revenue, we do not
have any single customer that provides more than 10% of our total revenue derived from external customers. Substantially all of our revenue from external customers comes from customers located in the United States.

Note 5: Commitments and Contingencies

QCII is
involved in several legal proceedings to which we are not a party that, if resolved against QCII, could have a material adverse effect on our business and financial condition. We have included below a discussion of these matters, together with a
discussion of those matters to which we are a party (primarily the



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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

For the Three and Six Months
Ended June 30, 2007

(Unaudited)



matter discussed in the last paragraph under the heading Remaining Securities Actions). Only those matters to which we are a party represent
contingencies for which we have recorded, or could reasonably anticipate recording, an accrual if appropriate to do so.

Throughout this
note, when we refer to a class action as putative it is because a class has been alleged, but not certified in that matter. Until and unless a class has been certified by the court, it has not been established that the named plaintiffs
represent the class of plaintiffs they purport to represent. Settlement classes have been certified in connection with the settlements of certain of the putative class actions described below where the courts held that the named plaintiffs
represented the settlement class they purported to represent.

Settlement of Consolidated Securities Action

Twelve putative class actions purportedly brought on behalf of purchasers of QCIIs publicly traded securities between May 24, 1999 and
February 14, 2002 were consolidated into a consolidated securities action pending in federal district court in Colorado against QCII and various other defendants. The first of these actions was filed on July 27, 2001. Plaintiffs alleged,
among other things, that defendants issued false and misleading financial results and made false statements about QCIIs business and investments, including materially false statements in certain of QCIIs registration statements. The most
recent complaint in this matter sought unspecified compensatory damages and other relief. However, counsel for plaintiffs indicated that the putative class would seek damages in the tens of billions of dollars.

In November 2005, QCII, certain other defendants, and the putative class representatives entered into and filed with the federal district court in
Colorado a Stipulation of Partial Settlement that, if implemented, will settle the consolidated securities action against QCII and certain other defendants. No parties admit any wrongdoing as part of the settlement. Pursuant to the settlement, QCII
has deposited approximately $400 million in cash into a settlement fund. Of this amount, $200 million was deposited in 2006, and the remaining $200 million (plus interest) was deposited in January 2007. In connection with the
settlement, QCII received $10 million from Arthur Andersen LLP. As part of the settlement, the class representatives and the settlement class they represent are also releasing Arthur Andersen. If the settlement is not implemented, QCII
will be repaid the $400 million plus interest, less certain expenses, and QCII will repay the $10 million to Arthur Andersen.

If
implemented, the settlement will resolve and release the individual claims of the class representatives and the claims of the settlement class they represent against QCII and all defendants except Joseph Nacchio, our former chief executive officer,
and Robert Woodruff, our former chief financial officer. In September 2006, the federal district court in Colorado issued an order approving the proposed settlement on behalf of purchasers of QCIIs publicly traded securities between
May 24, 1999 and July 28, 2002. Messrs. Nacchio and Woodruff have appealed that order to the United States Court of Appeals for the Tenth Circuit.

As noted below under Remaining Securities Actions, a number of persons, including certain large pension funds, were excluded from the settlement class at their request. Some of these funds have filed
individual suits against QCII. QCII will continue to defend against such claims vigorously.

Remaining Securities Actions

The remaining securities actions described below present material and significant risks to QCII. The size, scope and nature of the restatements of
QCIIs consolidated financial statements for 2001 and 2000, which are described in QCIIs previously issued consolidated financial statements for the year ended December 31, 2002, affect the risks presented by these actions, as these
matters involve, among other things, QCIIs prior accounting



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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

For the Three and Six Months
Ended June 30, 2007

(Unaudited)



practices and related disclosures. In addition to their allegations described below, plaintiffs in certain of the remaining securities actions have alleged
QCIIs restatement of items in support of their claims. We can give no assurance as to the impacts on our or QCIIs financial results or financial condition that may ultimately result from these matters.

QCII has reserves recorded in its financial statements for the minimum estimated amount of loss QCII believes is probable with respect to the remaining
securities actions as well as any additional actions that may be brought by parties that, as described below under Remaining Securities Actions, have opted out of the settlement of the consolidated securities action. QCII has recorded
its estimate of the minimum liability for these matters because no estimate of probable loss for these matters is a better estimate than any other amount. QCII has settled the claims brought by certain parties that opted out of the consolidated
securities action, and, although there is no certainty that these settlements are indicative of the terms of future settlements, QCII has taken these settlements into account when determining its estimate of the minimum liability for these matters.
If the recorded reserves are insufficient to cover these matters, QCII will need to record additional charges to its consolidated statement of operations in future periods. The amount QCII has reserved for these matters is its estimate of the lowest
end of the possible range of loss. The ultimate outcomes of these matters are still uncertain and the amount of loss QCII may ultimately incur could be substantially more than the reserves it has provided.

QCII continues to defend against the remaining securities actions vigorously and is currently unable to provide any estimate as to the timing of the
resolution of these actions. Settlements or judgments in several of these actions substantially in excess of QCIIs recorded reserves could have a significant impact on QCII. The magnitude of such settlements or judgments resulting from these
actions could materially and adversely affect QCIIs financial condition and ability to meet its debt obligations, potentially impacting its credit ratings, its ability to access capital markets and its compliance with debt covenants. In
addition, the magnitude of any such settlements or judgments may cause QCII to draw down significantly on its cash balances, which might force QCII to obtain additional financing or explore other methods to generate cash. Such methods could include
issuing additional securities or selling assets. As a wholly owned subsidiary of QCII, our business operations and financial condition would be similarly affected.

The terms and conditions of applicable bylaws, certificates or articles of incorporation, agreements or applicable law may obligate QCII to indemnify its former directors, officers and employees with respect to
certain liabilities, and QCII has been advancing legal fees and costs to many current and former directors, officers and employees in connection with the securities actions and certain other matters.

QCII is a defendant in the securities actions described below. At their request, plaintiffs in these actions were excluded from the settlement class of
the consolidated securities action. As a result, their claims were not released by the district courts order approving the settlement of the consolidated securities action. These plaintiffs have variously alleged, among other things, that QCII
and others violated federal and state securities laws, engaged in fraud, civil conspiracy and negligent misrepresentation, and breached fiduciary duties owed to investors by issuing false and misleading financial reports and statements, falsely
inflating revenue and decreasing expenses, creating false perceptions of revenue and growth prospects and/or employing improper accounting practices. Other defendants in one or more of these actions include former directors, officers and employees
of QCII, Arthur Andersen LLP, certain investment banks and others. Plaintiffs variously seek, among other things, compensatory and punitive damages, restitution, equitable and declaratory relief, pre-judgment interest, costs and attorneys
fees.



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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

For the Three and Six Months
Ended June 30, 2007

(Unaudited)



Together, the parties to these lawsuits contend that they have incurred losses resulting from their
investments in QCIIs securities in excess of $840 million; they have also asserted claims for punitive damages and interest, in addition to claims to recover their alleged losses.



|                                                                        |  |                                 |  |                                                             
|----------------------------------------------------------------------- |  | ------------------------------- |  | ------------------------------------------------------------
|Plaintiff(s)                                                            |  | Date Filed                      |  | Court Where Action Is Pending                               
|State of New Jersey (Treasury Department, Division of Investment)       |  | November 27, 2002               |  | New Jersey Superior Court, Mercer County                    
|State Universities Retirement System of Illinois                        |  | January 10, 2003                |  | Circuit Court of Cook County, Illinois                      
|Shriners Hospitals for Children                                         |  | March 22, 2004 October 31, 2006 |  | Federal District Court in Colorado                          
|New York State Common Retirement Fund                                   |  | April 18, 2006                  |  | Federal District Court in Colorado                          
|San Francisco Employees Retirement System                               |  | April 18, 2006                  |  | Federal District Court in Colorado                          
|Fire and Police Pension Association of Colorado                         |  | April 18, 2006                  |  | Federal District Court in Colorado                          
|Commonwealth of Pennsylvania Public School Employees Retirement System |  | May 1, 2006                     |  | Federal District Court in Colorado                          
|Merrill Lynch Investment Master Basic Value Trust Fund, et al.          |  | June 21, 2006                   |  | Federal District Court in Colorado                          
|Denver Employees Retirement Plan                                        |  | August 7, 2006                  |  | Federal District Court in Colorado                          
|FTWF Franklin Mutual Beacon Fund, et al.                                |  | October 17, 2006                |  | Superior Court, State of California, County of San Francisco

QCII has settled the lawsuits of certain other parties that were excluded from the settlement
class of the consolidated securities action.

At their request, other persons (including large pension funds) who have not yet filed suit
were also excluded from the settlement class. As a result, their claims will not be released by the order approving the settlement of the consolidated securities action even if that order is affirmed on appeal. QCII expects that some of these other
persons will file actions against it if it is unable to resolve those matters amicably. In the aggregate, the persons who have requested exclusion from the settlement class, excluding those listed in the table above and those whose claims have been
settled, contend that they have incurred losses resulting from their investments in QCIIs securities of approximately $1.15 billion, which does not include any claims for punitive damages or interest. Due to the fact that many of the persons
who requested exclusion from the settlement class have not filed lawsuits, it is difficult to evaluate the claims that they may assert. Regardless, QCII will vigorously defend against any such claims.

A putative class action purportedly brought on behalf of purchasers of QCIIs stock between June 28, 2000 and June 27, 2002 and owners of
U S WEST, Inc. stock on June 28, 2000 is pending in Colorado in the District Court for the County of Boulder. We are also a defendant in this action. This action was filed on June 27, 2002. Plaintiffs allege, among other things,
that QCII and other defendants issued false and misleading statements and engaged in improper accounting practices in order to accomplish the U S WEST/Qwest merger, to make QCII appear successful and to inflate the value of QCIIs
stock. Plaintiffs seek unspecified monetary damages, disgorgement of illegal gains and other relief.



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QWEST CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

For the Three and Six Months
Ended June 30, 2007

(Unaudited)



KPNQwest Litigation/Investigation

As previously disclosed, QCII and the other defendants settled a putative class action filed against it and others on behalf of certain purchasers of
publicly traded securities of KPNQwest, N.V. (of which QCII was a major shareholder). The most recent complaint alleged that, among other things, defendants engaged in a fraudulent scheme and deceptive course of business in order to inflate
KPNQwests revenue and the value of KPNQwest securities. At their request, certain individuals and entities were excluded from the settlement class. As a result, their claims were not released by the court order approving the settlement. Some
of these individuals and entities have already filed actions against QCII, as described below, and QCII is vigorously defending against these claims. QCII expects that at least some of the other persons who were excluded from the settlement class
will also pursue actions against it if it is unable to resolve their claims amicably. In the aggregate, those who were excluded from the settlement class currently contend that they have incurred losses of at least $76 million resulting from their
investments in KPNQwest securities during the settlement class period, which does not include any claims for punitive damages or interest. The amount of these alleged losses may increase or decrease in the future as we learn more about the potential
claims of those who opted out of the settlement class. Due to the fact that some of them have not filed lawsuits, it is difficult to evaluate the claims that they may assert. Regardless, QCII will vigorously defend against any such claims.

On October 31, 2002, Richard and Marcia Grand, co-trustees of the R.M. Grand Revocable Living Trust, dated January 25, 1991,
filed a lawsuit in Arizona Superior Court which, as amended, alleges, among other things, that the defendants violated state and federal securities laws and breached their fiduciary duty in connection with investments by plaintiffs in securities of
KPNQwest. QCII is a defendant in this lawsuit along with Qwest B.V. (one of QCIIs subsidiaries), Joseph Nacchio and John McMaster, the former President and Chief Executive Officer of KPNQwest. Plaintiffs claim to have lost approximately
$10 million in their investments in KPNQwest. The superior court granted defendants motion for partial summary judgment with respect to a substantial portion of plaintiffs claims and the remainder of plaintiffs claims were
dismissed without prejudice. Plaintiffs appealed the summary judgment order to the Arizona Court of Appeals, which affirmed in part and reversed in part the superior courts decision. We are seeking review by the Arizona Supreme Court of that
portion of the Court of Appeals decision that reversed the superior courts decision.

On June 25, 2004, the trustees in
the Dutch bankruptcy proceeding for KPNQwest filed a lawsuit in the federal district court for the District of New Jersey alleging violations of the Racketeer Influenced and Corrupt Organizations Act, and breach of fiduciary duty and mismanagement
under Dutch law. QCII is a defendant in this lawsuit along with Joseph Nacchio, Robert S. Woodruff and John McMaster. Plaintiffs allege, among other things, that defendants actions were a cause of the bankruptcy of KPNQwest and they seek
damages for the bankruptcy deficit of KPNQwest of approximately $2.4 billion. Plaintiffs also seek treble damages as well as an award of plaintiffs attorneys fees and costs. On October 17, 2006, the court issued an order
granting defendants motion to dismiss the lawsuit, concluding that the dispute should not be adjudicated in the United States. Plaintiffs have appealed this decision to the United States Court of Appeals for the Third Circuit.

On June 17, 2005, Appaloosa Investment Limited Partnership I, Palomino Fund Ltd., and Appaloosa Management L.P. filed a lawsuit in the federal
district court for the Southern District of New York against QCII, Joseph Nacchio, John McMaster and Koninklijke KPN N.V., or KPN. The amended complaint alleges that defendants violated federal securities laws in connection with the purchase by
plaintiffs of certain KPNQwest debt securities. Plaintiffs seek compensatory damages, as well as an award of plaintiffs attorneys fees and costs.



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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

For the Three and Six Months
Ended June 30, 2007

(Unaudited)



On September 13, 2006, Cargill Financial Markets, Plc and Citibank, N.A. filed a lawsuit in the
District Court of Amsterdam, The Netherlands, against QCII, KPN Telecom B.V., KPN, Joseph Nacchio, John McMaster, and other former employees or supervisory board members of QCII, KPNQwest, or KPN. The lawsuit alleges that defendants misrepresented
KPNQwests financial and business condition in connection with the origination of a credit facility and wrongfully allowed KPNQwest to borrow funds under that facility. Plaintiffs allege damages of approximately 219 million (or
approximately $295 million based on the exchange rate on June 30, 2007).

On August 23, 2005, the Dutch Shareholders
Association (Vereniging van Effectenbezitters, or VEB) filed a petition for inquiry with the Enterprise Chamber of the Amsterdam Court of Appeals, located in The Netherlands, with regard to KPNQwest. VEB sought an inquiry into the policies and
course of business at KPNQwest that are alleged to have caused the bankruptcy of KPNQwest in May 2002, and an investigation into alleged mismanagement of KPNQwest by its executive management, supervisory board members, joint venture entities
(QCII and KPN), and KPNQwests outside auditors and accountants. On December 28, 2006, the Enterprise Chamber ordered an inquiry into the management and conduct of affairs of KPNQwest for the period January 1 through May 23,
2002. QCII and others have appealed that order to The Netherlands Supreme Court.

Purporting to speak for an unspecified number of
shareholders, VEB also sought exclusion from the settlement class in the settlements of the KPNQwest putative securities class action described above. The information that VEB provided in support of its request for exclusion did not indicate the
losses claimed to have been sustained by VEB or the unspecified shareholders that VEB purports to represent, and thus those claims are not included in the approximately $76 million of losses claimed by those who requested exclusion from the
settlement class, as described above. In view of these and other deficiencies in VEBs request for exclusion, VEB was not excluded from the settlement class. QCII can provide no assurance, however, that its settlement will be enforced against
VEB or the shareholders it purports to represent if VEB or such shareholders were to bring claims against QCII in The Netherlands.

QCII
will continue to defend against the pending KPNQwest litigation matters vigorously.

Other Matters

Several putative class actions relating to the installation of fiber optic cable in certain rights-of-way were filed against QCII on behalf of landowners
on various dates and in various courts in California, Colorado, Georgia, Illinois, Indiana, Kansas, Massachusetts, Mississippi, Missouri, Oregon, South Carolina, Tennessee and Texas. For the most part, the complaints challenge QCIIs right to
install its fiber optic cable in railroad rights-of-way. Complaints in Colorado, Illinois and Texas, also challenge QCIIs right to install fiber optic cable in utility and pipeline rights-of-way. The complaints allege that the railroads,
utilities and pipeline companies own the right-of-way as an easement that did not include the right to permit QCII to install its fiber optic cable in the right-of-way without the plaintiffs consent. Most actions (California, Colorado,
Georgia, Kansas, Mississippi, Missouri, Oregon, South Carolina, Tennessee and Texas) purport to be brought on behalf of state-wide classes in the named plaintiffs respective states. The Massachusetts action purports to be on behalf of
state-wide classes in all states (other than Indiana, Louisiana and Tennessee) in which QCII has fiber optic cable in railroad rights-of-way, and also on behalf of two classes of landowners whose properties adjoin railroad rights-of-way originally
derived from federal land grants. Several actions purport to be brought on behalf of multi-state classes. The Illinois state court action purports to be on behalf of landowners in Illinois, Iowa, Kentucky, Michigan, Minnesota, Nebraska, Ohio and
Wisconsin. The Illinois federal court action purports to be



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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

For the Three and Six Months
Ended June 30, 2007

(Unaudited)



on behalf of landowners in Arkansas, California, Florida, Illinois, Indiana, Missouri, Nevada, New Mexico, Montana and Oregon. The Indiana action purports to
be on behalf of a national class of landowners adjacent to railroad rights-of-way over which QCIIs network passes. The complaints seek damages on theories of trespass and unjust enrichment, as well as punitive damages.

On September 1, 2006, Ronald A. Katz Technology Licensing, L.P. (Katz) filed a lawsuit in Federal District Court in Delaware against
QCII (including a number of its subsidiaries). The lawsuit alleges infringement by QCII of 24 patents. The lawsuit also names as defendants a number of other entities that are unrelated to QCII. Katz is also involved in numerous other cases against
unrelated entities. These cases have been consolidated before the United States District Court for the Central District of California for coordinated pretrial proceedings. Although the complaint against QCII is vague, it generally alleges
infringement based on QCIIs use of interactive voice response systems to automate processing of customer calls to it. Katz seeks unspecified damages, trebling of damages based on alleged willful infringement, attorneys fees and
injunctive relief. QCII will vigorously defend against this action.

A putative class action purportedly filed on behalf of certain of
QCIIs retirees was brought against QCII and certain other defendants in Federal District Court in Colorado in connection with QCIIs decision to reduce life insurance benefits for these retirees to a flat $10,000 benefit. The action was
filed on March 30, 2007. The plaintiffs allege, among other things, that QCII and other defendants were obligated to continue their life insurance benefits at the levels in place before QCII decided to reduce them. Plaintiffs seek restoration
of life insurance benefits to previous levels and certain equitable relief. QCII believes that its reduction of life insurance benefits was permissible under applicable law and plan documents and will vigorously defend against this action.

QCII has tax related matters pending against it, certain of which are before the Appeals Office of the IRS. In addition, tax sharing
agreements have been executed between QCII and previous affiliates, and QCII believes the liabilities, if any, arising from adjustments to previously filed returns would be borne by the affiliated group member determined to have a deficiency under
the terms and conditions of such agreements and applicable tax law. Generally, QCII has not provided for liabilities of former affiliated members or for claims they have asserted or may assert against QCII. QCII believes it has adequately provided
for these tax-related matters. If the recorded reserves for these tax-related matters are insufficient, QCII may need to record additional amounts in future periods.

Note 6: Dividends

During the three and six months ended June 30, 2007, we declared
dividends of $600 million and $1.2 billion, respectively, to our parent, Qwest Services Corporation (QSC). On July 31, 2007, we paid a dividend of $200 million.



14



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##### Table of Contents

|ITEM 2. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|------- | -------------------------------------------------------------------------------------

Unless the context requires otherwise, references in this report to QC refer to Qwest Corporation, references to Qwest,
we, us, the Company and our refer to Qwest Corporation and its consolidated subsidiaries, and references to QCII refer to our ultimate parent company, Qwest Communications
International Inc., and its consolidated subsidiaries.

Certain statements set forth below under this caption constitute
forward-looking statements. See Special Note Regarding Forward-Looking Statements at the end of this Item 2 for additional factors relating to such statements, and see Risk Factors in Item 1A of Part II of this
report for a discussion of certain risk factors applicable to our business, financial condition and results of operations.

Business Overview and
Presentation

We provide voice, data and video services within our local service area, which consists of the 14-state region of Arizona,
Colorado, Idaho, Iowa, Minnesota, Montana, Nebraska, New Mexico, North Dakota, Oregon, South Dakota, Utah, Washington and Wyoming. Through joint marketing relationships with our affiliates, we are able to bundle our services with additional services
offered by our affiliates.

Our operations are included in the consolidated operations of our ultimate parent, QCII, and generally account
for the majority of QCIIs consolidated revenue. In addition to our operations, QCII maintains a wireless business and a national fiber optic network. Through its fiber optic network, QCII provides the following wireline products and services
that we do not provide:



| |  |  | InterLATA long-distance services;
| | - |  | ---------------------------------



| |  |  | Dedicated Internet access;
| | - |  | --------------------------



| |  |  | Virtual private network;
| | - |  | ------------------------



| |  |  | Web hosting;
| | - |  | ------------



| |  |  | Data integration;
| | - |  | -----------------



| |  |  | VoIP;
| | - |  | -----



| |  |  | MPLS-based services sold as iQ Networking; and
| | - |  | -----------------------------------------------



| |  |  | Cable-based video.
| | - |  | ------------------

For certain
products and services we provide and for a variety of internal communications functions, we use parts of QCIIs network to transport voice and data traffic. Through its network, QCII also provides nationally and globally some data and Internet
access services, including private line, ATM and frame relay, that are similar to services we provide within our local service area.

Our
analysis presented below is organized to provide the information we believe will be useful for understanding the relevant trends going forward. However, this discussion should be read in conjunction with our condensed consolidated financial
statements and the notes thereto in Item 1 of Part I of this report.

Our operations are integrated into and are part of the segments
of the QCII consolidated group. We have the same chief operating decision maker, or CODM, as the consolidated group. The CODM makes resource allocation decisions and assessments of financial performance for the consolidated group based on
QCIIs wireline services, wireless services and other services segments. For more information about QCIIs reporting segments, see QCIIs Annual Report on Form 10-K for the year ended December 31, 2006. Our business
contributes to QCIIs wireline services and other services segments. However, the QCII CODM reviews our



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##### Table of Contents

financial information only in connection with our quarterly and annual reports that we file with the Securities and Exchange Commission, or SEC.
Consequently, we do not provide our discrete financial information to the CODM on a regular basis. See further discussion in Note 4Contribution to QCII Segments to our condensed consolidated financial statements in Item 1 of Part I
of this report.

We have reclassified certain prior period revenue, expense and access line amounts to conform to the current period
presentation.

Business Trends

Our
financial results continue to be impacted by several significant trends, which are described below:



| |  |  | Data, Internet and video growth.Revenue from data, Internet and video services currently represents 29% of our total revenue and continues to grow. At the
same time, our customers continue to shift away from traditional data, Internet and video products to more advanced technologies. Our results reflect our continued focus on these more-advanced, high-growth products including broadband services,
private line and video. The revenue increases from these high-growth products have outpaced declines in revenue from traditional data, Internet and video services including ATM and frame relay.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

We continue to focus our efforts on improving penetration of broadband services, and broadband subscribers continue to grow as customers migrate from
dial-up connections to higher speed connections. We reached 2.3 million subscribers as of June 30, 2007 compared to 1.8 million as of the same date in 2006. We expect growth in broadband subscribers to continue, even though we expect
to face continuing competition for these subscribers. In addition, we believe the ability to continually increase connection speeds is competitively important. As such, we continue to invest in increasing our available connection speeds in order to
meet customer demand.



| |  |  | Access line losses. Our revenue has been, and we expect it will continue to be, adversely affected by access line losses. Increased competition, including
product substitution, continues to be the primary reason for our access line losses. For example, consumers are substituting cable, wireless and VoIP for traditional telecommunications services, which has increased the number and type of competitors
within our industry and has decreased our market share. In addition, consolidation in the telecommunications industry continues to impact our revenue. Product bundling, as described below, has been one of our responses to access line losses.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Product bundling. We believe customers value the convenience and price discounts associated with receiving multiple services from a single provider.
Accordingly, QCII and we promote product bundles through joint marketing and advertising efforts with our affiliates. Product bundles represent combinations of products and services offered by us or our affiliates for our mass markets customers.
These products and services include local and long-distance (marketed as digital voice), broadband, video and wireless. As a result of these offerings, our sales of bundled products have increased. While bundle discounts have resulted in
lower average revenue for our individual products, we believe product bundles positively impact customer retention and revenue per customer.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Operational efficiencies. We continue to evaluate our operating structure and focus. In some cases, this involves adjusting our workforce and our
relationships with our affiliates in response to changes in the telecommunications industry, regulatory changes and productivity improvements. Through targeted restructuring plans in prior years, focused improvements in operational efficiency,
process improvements through automation and normal employee attrition, we have reduced our workforce and employee-related costs while achieving operational goals.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

While these trends are important to understanding and evaluating our financial results, the other transactions, events and trends discussed in Risk
Factors in Item 1A of Part II of this report may also materially impact our business operations and financial results.



16



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##### Table of Contents

Results of Operations

Overview

We generate revenue from the provision of voice services, data, Internet and video services and other
services, as well as from the provision of services to our affiliates.



| |  |  | Voice services. Voice services include local voice services, IntraLATA long-distance voice services and access services. Local voice services include basic
local exchange, switching and enhanced voice services. Local voice services also include network transport, billing services and providing access to our local network through our wholesale channel. Access services include fees charged to other
telecommunications providers to connect their customers and their networks to our network.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Data, Internet and video services. Data, Internet and video services represent our fastest growing source of revenue. We offer data and Internet services to
our mass markets, business and wholesale customers. We also offer broadband services and resold satellite digital television to our mass markets customers.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Affiliate and other services. We provide to our affiliates billing and collection, marketing and advertising and other support services. In addition, we
provide to our affiliates local voice, access and data services that we also provide to external customers. Other services include the sublease of space in our office buildings, warehouses and other properties.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Depending on the products or services purchased, a customer may pay an up-front or monthly fee, a usage charge or a combination of these.

The following table summarizes our results of operations for the three and six months ended June 30, 2007 and 2006 and the number of employees as of
June 30, 2007 and 2006:



|                           |  |                             |       |      |                           |                     |  |   |         |   |  |      |    |      |   |                     |  |   |         |  |   |        |   |  |    |   
|-------------------------- |  | --------------------------- | ----- | ---- | ------------------------- | ------------------- |  | - | ------- | - |  | ---- | -- | ---- | - | ------------------- |  | - | ------- |  | - | ------ | - |  | -- | --
|                           |  | Three Months Ended June 30, |       |      | Six Months Ended June 30, |                    
|                           |  | 2007                        |       | 2006 |                           | Increase/(Decrease) |  |   | %Change |   |  | 2007 |    | 2006 |   | Increase/(Decrease) |  |   | %Change | 
|                           |  | (Dollars in millions)       |      
|Operating revenue          |  | $                           | 2,501 |      | $                         | 2,460               |  | $ | 41      |   |  | 2    | %  |      | $ | 4,959               |  | $ | 4,938   |  | $ | 21     |   |  |   | % 
|Operating expenses         |  |                             | 1,733 |      |                           | 1,890               |  |   | (157    | ) |  | (8   | )% |      |   | 3,415               |  |   | 3,765   |  |   | (350   | ) |  | (9 | )%
|Other expensenet          |  |                             | 170   |      |                           | 153                 |  |   | 17      |   |  | 11   | %  |      |   | 321                 |  |   | 305     |  |   | 16     |   |  | 5  | % 
|                           |  |                             |       |      |                           |                     |  |   |         |   |  |      |    |      |   |                     |  |   |         |  |   |        |   |  |    |   
|Income before income taxes |  |                             | 598   |      |                           | 417                 |  |   | 181     |   |  | 43   | %  |      |   | 1,223               |  |   | 868     |  |   | 355    |   |  | 41 | % 
|Income tax expense         |  |                             | 232   |      |                           | 154                 |  |   | 78      |   |  | 51   | %  |      |   | 465                 |  |   | 321     |  |   | 144    |   |  | 45 | % 
|                           |  |                             |       |      |                           |                     |  |   |         |   |  |      |    |      |   |                     |  |   |         |  |   |        |   |  |    |   
|Net income                 |  | $                           | 366   |      | $                         | 263                 |  | $ | 103     |   |  | 39   | %  |      | $ | 758                 |  | $ | 547     |  | $ | 211    |   |  | 39 | % 
|                           |  |                             |       |      |                           |                     |  |   |         |   |  |      |    |      |   |                     |  |   |         |  |   |        |   |  |    |   
|Employees (as of June 30)  |  |                             |       |      |                           |                     |  |   |         |   |  |      |    |      |   | 25,346              |  |   | 27,294  |  |   | (1,948 | ) |  | (7 | )%

Operating Revenue

The following table compares our operating revenue for the three and six months ended June 30, 2007 and 2006:



|                                  |  |                             |       |      |                           |                     |  |   |         |   |  |      |    |      |   |                     |  |   |         |  |   |      |   |  |    |   
|--------------------------------- |  | --------------------------- | ----- | ---- | ------------------------- | ------------------- |  | - | ------- | - |  | ---- | -- | ---- | - | ------------------- |  | - | ------- |  | - | ---- | - |  | -- | --
|                                  |  | Three Months Ended June 30, |       |      | Six Months Ended June 30, |                    
|                                  |  | 2007                        |       | 2006 |                           | Increase/(Decrease) |  |   | %Change |   |  | 2007 |    | 2006 |   | Increase/(Decrease) |  |   | %Change | 
|                                  |  | (Dollars in millions)       |      
|Operating Revenue:                |  |                             |       |      |                           |                     |  |   |         |   |  |      |    |      |   |                     |  |   |         |  |   |      |   |  |    |   
|Voice services                    |  | $                           | 1,484 |      | $                         | 1,586               |  | $ | (102    | ) |  | (6   | )% |      | $ | 2,973               |  | $ | 3,206   |  | $ | (233 | ) |  | (7 | )%
|Data, Internet and video services |  |                             | 721   |      |                           | 630                 |  |   | 91      |   |  | 14   | %  |      |   | 1,422               |  |   | 1,246   |  |   | 176  |   |  | 14 | % 
|Affiliate and other services      |  |                             | 296   |      |                           | 244                 |  |   | 52      |   |  | 21   | %  |      |   | 564                 |  |   | 486     |  |   | 78   |   |  | 16 | % 
|                                  |  |                             |       |      |                           |                     |  |   |         |   |  |      |    |      |   |                     |  |   |         |  |   |      |   |  |    |   
|Total operating revenue           |  | $                           | 2,501 |      | $                         | 2,460               |  | $ | 41      |   |  | 2    | %  |      | $ | 4,959               |  | $ | 4,938   |  | $ | 21   |   |  |   | % 
|                                  |  |                             |       |      |                           |                     |  |   |         |   |  |      |    |      |   |                     |  |   |         |  |   |      |   |  |    |   



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##### Table of Contents

Voice Services

Local voice services revenue decreased primarily due to access line losses as a result of the competitive pressures described in Business Trends above. Mass markets and business local voice services
revenue were impacted by these competitive pressures as customers disconnected primary and additional lines. Additionally, lower Universal Service Fund, or USF, revenue caused combined mass markets and business local voice services revenue to
decline by $12 million and $30 million for the three and six months ended June 30, 2007, respectively, compared to the same periods of 2006. The decrease in USF revenue (and corresponding decrease in USF charges) was primarily due to the
elimination of the USF assessment on certain products in late 2006. Wholesale local services revenue continued to be affected by a declining demand for UNEs.

Access services revenue increased for the three months ended June 30, 2007 compared to the same period of 2006 primarily due to net favorable settlements of customer billing disputes, partially offset by
decreased volumes. Access services revenue decreased for the six months ended June 30, 2007 compared to the same period of 2006 primarily due to an 8% decline in volumes and, to a lesser extent, a decline in rates, partially offset by net
favorable settlements. The decline in access services volumes was due to a decline in long-distance usage, as well as mass markets and business access line losses.

The following table summarizes our access lines by customer channel as of June 30, 2007 and 2006:



|                   |  |                |  |        |  |                     |   |  |         |   
|------------------ |  | -------------- |  | ------ |  | ------------------- | - |  | ------- | --
|                   |  | As of June 30, | 
|                   |  | 2007           |  | 2006   |  | Increase/(Decrease) |   |  | %Change |   
|                   |  | (in thousands) | 
|Mass markets       |  | 9,070          |  | 9,739  |  | (669                | ) |  | (7      | )%
|Business           |  | 2,817          |  | 2,920  |  | (103                | ) |  | (4      | )%
|Wholesale          |  | 1,385          |  | 1,624  |  | (239                | ) |  | (15     | )%
|                   |  |                |  |        |  |                     |   |  |         |   
|Total access lines |  | 13,272         |  | 14,283 |  | (1,011              | ) |  | (7      | )%
|                   |  |                |  |        |  |                     |   |  |         |   

Data, Internet and Video Services

The increase in data, Internet and video services revenue in our mass markets channel was primarily due to an increase in broadband subscribers of
approximately 33% as of June 30, 2007 compared to June 30, 2006 and, to a lesser extent, increases in satellite video subscribers. The growth in broadband services revenue resulted from continued increased penetration as customers migrated
from dial-up connections and from customers upgrading to higher speed plans. The increase in data and Internet services revenue in our wholesale channel was primarily due to growth in private line volumes.

Affiliate and Other Services

The
increase in affiliate and other services revenue was primarily due to growth in private line and other services we provide to support our affiliates data, Internet and video businesses and, to a lesser extent, price increases for these
services. We expect affiliate revenue to increase in 2007 as we provide to our affiliates access to customers within our 14-state region to support their growth in data, Internet and video services.



18



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##### Table of Contents

Operating Expenses

The following table provides further detail regarding our operating expenses for the three and six months ended June 30, 2007 and 2006:



|                                          |  |                             |       |      |                           |                     |  |   |         |   |  |      |    |      |   |                     |  |   |         |  |   |      |   |  |     |   
|----------------------------------------- |  | --------------------------- | ----- | ---- | ------------------------- | ------------------- |  | - | ------- | - |  | ---- | -- | ---- | - | ------------------- |  | - | ------- |  | - | ---- | - |  | --- | --
|                                          |  | Three Months Ended June 30, |       |      | Six Months Ended June 30, |                    
|                                          |  | 2007                        |       | 2006 |                           | Increase/(Decrease) |  |   | %Change |   |  | 2007 |    | 2006 |   | Increase/(Decrease) |  |   | %Change | 
|                                          |  | (Dollars in millions)       |      
|Cost of sales:                            |  |                             |       |      |                           |                     |  |   |         |   |  |      |    |      |   |                     |  |   |         |  |   |      |   |  |     |   
|Network expenses                          |  | $                           | 47    |      | $                         | 47                  |  | $ |        |   |  |     | %  |      | $ | 80                  |  | $ | 88      |  | $ | (8   | ) |  | (9  | )%
|Employee-related costs                    |  |                             | 314   |      |                           | 339                 |  |   | (25     | ) |  | (7   | )% |      |   | 643                 |  |   | 685     |  |   | (42  | ) |  | (6  | )%
|Other non-employee related costs          |  |                             | 123   |      |                           | 139                 |  |   | (16     | ) |  | (12  | )% |      |   | 235                 |  |   | 270     |  |   | (35  | ) |  | (13 | )%
|Affiliate costs                           |  |                             | 56    |      |                           | 49                  |  |   | 7       |   |  | 14   | %  |      |   | 114                 |  |   | 109     |  |   | 5    |   |  | 5   | % 
|                                          |  |                             |       |      |                           |                     |  |   |         |   |  |      |    |      |   |                     |  |   |         |  |   |      |   |  |     |   
|Total cost of sales                       |  |                             | 540   |      |                           | 574                 |  |   | (34     | ) |  | (6   | )% |      |   | 1,072               |  |   | 1,152   |  |   | (80  | ) |  | (7  | )%
|                                          |  |                             |       |      |                           |                     |  |   |         |   |  |      |    |      |   |                     |  |   |         |  |   |      |   |  |     |   
|Selling, general and administrative:      |  |                             |       |      |                           |                     |  |   |         |   |  |      |    |      |   |                     |  |   |         |  |   |      |   |  |     |   
|Property and other taxes                  |  |                             | 85    |      |                           | 83                  |  |   | 2       |   |  | 2    | %  |      |   | 165                 |  |   | 161     |  |   | 4    |   |  | 2   | % 
|Bad debt                                  |  |                             | 19    |      |                           | 15                  |  |   | 4       |   |  | 27   | %  |      |   | 36                  |  |   | 35      |  |   | 1    |   |  | 3   | % 
|Restructuring, realignment and severance  |  |                             | 3     |      |                           | 1                   |  |   | 2       |   |  | 200  | %  |      |   | 1                   |  |   | 5       |  |   | (4   | ) |  | (80 | )%
|Employee-related costs                    |  |                             | 125   |      |                           | 151                 |  |   | (26     | ) |  | (17  | )% |      |   | 259                 |  |   | 290     |  |   | (31  | ) |  | (11 | )%
|Other non-employee related costs          |  |                             | 191   |      |                           | 207                 |  |   | (16     | ) |  | (8   | )% |      |   | 360                 |  |   | 395     |  |   | (35  | ) |  | (9  | )%
|Affiliate costs                           |  |                             | 249   |      |                           | 267                 |  |   | (18     | ) |  | (7   | )% |      |   | 479                 |  |   | 539     |  |   | (60  | ) |  | (11 | )%
|                                          |  |                             |       |      |                           |                     |  |   |         |   |  |      |    |      |   |                     |  |   |         |  |   |      |   |  |     |   
|Total selling, general and administrative |  |                             | 672   |      |                           | 724                 |  |   | (52     | ) |  | (7   | )% |      |   | 1,300               |  |   | 1,425   |  |   | (125 | ) |  | (9  | )%
|                                          |  |                             |       |      |                           |                     |  |   |         |   |  |      |    |      |   |                     |  |   |         |  |   |      |   |  |     |   
|Depreciation and amortization             |  |                             | 521   |      |                           | 592                 |  |   | (71     | ) |  | (12  | )% |      |   | 1,043               |  |   | 1,188   |  |   | (145 | ) |  | (12 | )%
|                                          |  |                             |       |      |                           |                     |  |   |         |   |  |      |    |      |   |                     |  |   |         |  |   |      |   |  |     |   
|Total operating expenses                  |  | $                           | 1,733 |      | $                         | 1,890               |  | $ | (157    | ) |  | (8   | )% |      | $ | 3,415               |  | $ | 3,765   |  | $ | (350 | ) |  | (9  | )%
|                                          |  |                             |       |      |                           |                     |  |   |         |   |  |      |    |      |   |                     |  |   |         |  |   |      |   |  |     |   

---

nmPercentages greater than 200% and comparisons
between positive and negative values or to/from zero values are considered not meaningful.

Cost of Sales (exclusive of depreciation and
amortization)

Cost of sales includes costs incurred in the process of providing products and services to our customers. This includes
employee-related costs (such as salaries, wages and benefits directly attributable to providing products or services), network expenses and other non-employee related costs (such as real estate, USF charges, call termination fees, materials and
supplies, contracted engineering services and computer system support), which are incurred by us or on our behalf by our affiliates.

Cost
of sales as a percentage of revenue decreased to 22% from 23% for each of the three and six months ended June 30, 2007 compared to the same periods of 2006.

Employee-related costs decreased due to employee reductions and lower employee benefit costs primarily as a result of benefit plan changes effective in 2007 and net reduced costs associated with the recognition of
actuarial losses from prior years. These decreases were partially offset by additional maintenance work.

Other non-employee related costs
decreased primarily due to lower USF charges largely related to the elimination of the USF assessment on certain products and lower access costs.



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##### Table of Contents

Selling, General and Administrative Expenses

Selling, general and administrative, or SG&A, expenses include employee-related costs (such as salaries, wages and benefits not directly attributable
to products or services and sales commissions), restructuring, realignment and severance, bad debt, property and other taxes and other non-employee related costs (such as real estate, marketing and advertising, professional service fees, computer
systems support and litigation related charges), which are incurred by us or on our behalf by our affiliates.

SG&A expenses as a
percentage of revenue decreased to 27% from 29% for the three months ended June 30, 2007 compared to the same period of 2006. SG&A expenses decreased to 26% from 29% for the six months ended June 30, 2007 compared to the same period of
2006.

Employee-related costs decreased due to employee reductions and lower employee benefit costs primarily as a result of benefit plan
changes in 2007 and net reduced costs associated with the recognition of actuarial losses from prior years.

Other non-employee related
costs decreased primarily due to lower marketing and advertising costs and a $15 million charge in the second quarter of 2006 for a regulatory matter.

SG&A affiliate costs include services for corporate administration, information technology, sales, marketing and advertising and technical support. These affiliate costs decreased primarily due to employee-related
cost reductions, decreased affiliate spending on marketing and advertising and lower sales costs.

Pension and Post-Retirement Benefits

QCII allocated to us combined benefits expense of $6 million and $12 million for the three and six months ended June 30, 2007,
respectively, compared to $40 million and $80 million for the three and six months ended June 30, 2006, respectively. The expense decreased primarily as a result of benefit plan changes and net reduced costs associated with the recognition
of actuarial losses from prior years. Effective January 1, 2007, changes to our benefit plans capped our levels of contributions for certain post-retirement healthcare benefits and reduced the post-retirement benefit under the life insurance
plan, which decreased our liability substantially. Actuarial gains or losses reflect the differences between our actuarial assumptions and what actually occurred. The amortization of actuarial losses for this period was reduced primarily due to
higher discount rates and higher than expected actual returns on pension assets.

Depreciation and Amortization

Depreciation expense decreased due to lower capital expenditures and the changing mix of our investment in property, plant and equipment since 2002. If
our capital investment program remains approximately the same and we do not significantly decrease our estimates of the useful lives of our assets, we expect that our depreciation expense will continue to decrease.

Amortization expense decreased due to the change in our estimate of average economic lives in January 2007 and lower capital spending on software related
assets since 2001. Amortization expense would have been $22 million and $45 million higher for the three and six months ended June 30, 2007, respectively, had we not changed our estimates of the average economic lives to better
reflect the expected future use of the software.



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##### Table of Contents

Other Consolidated Results

The following table provides detail regarding other expense (income)net and income tax expense:



|                                                                |  |                             |     |      |                           |     |                     |  |   |         |   |  |      |    |      |   |     |                     |   |     |         |  |   |     |   |  |    |   
|--------------------------------------------------------------- |  | --------------------------- | --- | ---- | ------------------------- | --- | ------------------- |  | - | ------- | - |  | ---- | -- | ---- | - | --- | ------------------- | - | --- | ------- |  | - | --- | - |  | -- | --
|                                                                |  | Three Months Ended June 30, |     |      | Six Months Ended June 30, |    
|                                                                |  | 2007                        |     | 2006 |                           |     | Increase/(Decrease) |  |   | %Change |   |  | 2007 |    | 2006 |   |     | Increase/(Decrease) |   |     | %Change | 
|                                                                |  | (Dollars in millions)       |    
|Other expense (income)net:                                     |  |                             |     |      |                           |     |                     |  |   |         |   |  |      |    |      |   |     |                     |   |     |         |  |   |     |   |  |    |   
|Interest expense on long-term borrowings and capital leasesnet |  | $                           | 148 |      | $                         | 156 |                     |  | $ | (8      | ) |  | (5   | )% |      | $ | 301 |                     | $ | 309 |         |  | $ | (8  | ) |  | (3 | )%
|Loss on early retirement of debtnet                            |  |                             | 18  |      |                           |    |                     |  |   | 18      |   |  | nm   |    |      |   | 18  |                     |   |    |         |  |   | 18  |   |  | nm |   
|Othernet                                                       |  |                             | 4   |      |                           | (3  | )                   |  |   | 7       |   |  | nm   |    |      |   | 2   |                     |   | (4  | )       |  |   | 6   |   |  | nm |   
|                                                                |  |                             |     |      |                           |     |                     |  |   |         |   |  |      |    |      |   |     |                     |   |     |         |  |   |     |   |  |    |   
|Total other expense (income)net                                |  | $                           | 170 |      | $                         | 153 |                     |  | $ | 17      |   |  | 11   | %  |      | $ | 321 |                     | $ | 305 |         |  | $ | 16  |   |  | 5  | % 
|                                                                |  |                             |     |      |                           |     |                     |  |   |         |   |  |      |    |      |   |     |                     |   |     |         |  |   |     |   |  |    |   
|Income tax expense                                              |  | $                           | 232 |      | $                         | 154 |                     |  | $ | 78      |   |  | 51   | %  |      | $ | 465 |                     | $ | 321 |         |  | $ | 144 |   |  | 45 | % 

---

nmPercentages greater than 200% and comparisons
between positive and negative values or to/from zero values are considered not meaningful.

The effective income tax rate is the provision
for income taxes as a percentage of income before income taxes. The effective income tax rate was 39% and 37% for the three months ended June 30, 2007 and 2006, respectively, and 38% and 37% for the six months ended June 30, 2007 and 2006,
respectively. The increase for both periods was primarily due to a one-time tax reduction in 2006 for non-taxable income associated with the federal subsidy under the Medicare Prescription Drug, Improvement and Modernization Act of 2003.

Liquidity and Capital Resources

We are a wholly
owned subsidiary of Qwest Services Corporation, or QSC, which is wholly owned by QCII. As such, factors relating to, or affecting, QCIIs liquidity and capital resources could have material impacts on us, including changes in the markets
perception of us and impacts on our credit ratings and on our access to capital markets. QCII and its consolidated subsidiaries had total borrowings of $14.5 billion at June 30, 2007 and $14.9 billion at December 31, 2006.

QCII has cash management arrangements between certain of its subsidiaries that include lines of credit, inter-company obligations, capital
contributions and dividends. As part of these cash management arrangements, affiliates provide lines of credit to certain other affiliates. Amounts outstanding under these lines of credit and inter-company obligations vary from time to time and are
classified as short-term borrowings.

Near-Term View

We had $392 million in cash and cash equivalents and $95 million of short-term investments available at June 30, 2007. For the six months ended June 30, 2007, our cash was provided by operating
activities. During 2007, we expect to use our available excess cash primarily to pay dividends to QSC and to make additional investment in our network. We expect our 2007 capital expenditures to approximate our 2006 level. For the six months
ended June 30, 2007, we declared dividends of $1.2 billion to QSC.

Our working capital deficit, or the amount by which our
current liabilities exceed our current assets, was $382 million and $647 million as of June 30, 2007 and December 31, 2006, respectively. Our working capital deficit decreased $265 million primarily due to earnings
before depreciation and amortization and proceeds from the issuance of long-term debt, partially offset by capital expenditures, dividends declared to QSC and early retirement of debt.



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Our working capital deficit is primarily caused by dividends that we pay to QSC. The timing of cash
payments for declared dividends to QSC is at our discretion in consultation with QSC. We continue to produce significant cash from operating activities, and we believe that our cash on hand together with our short-term investments and our cash flows
from operations should be sufficient to meet our cash needs through the next 12 months. However, if we or QCII become subject to significant judgments, settlements and/or tax payments, as further discussed in Note 5Commitments and
Contingencies to our condensed consolidated financial statements in Item 1 of Part I of this report, we or QCII could be required to make significant payments that may cause us to draw down significantly on our cash balances. The magnitude of
any settlements or judgments resulting from these actions could materially and adversely affect QCIIs financial condition and ability to meet its debt obligations, potentially impacting its credit ratings, its ability to access capital markets
and its compliance with debt covenants. As a wholly owned subsidiary of QCII, our business operations and financial condition could be similarly affected.

To the extent that QCIIs EBITDA (earnings before interest, taxes, depreciation and amortization as defined in QCIIs debt covenants) is reduced by cash judgments, settlements and/or tax payments, its debt
to consolidated EBITDA ratios under certain debt agreements will be adversely affected. This could reduce QCIIs liquidity and flexibility due to potential restrictions on drawing on its line of credit and potential restrictions on incurring
additional debt under certain provisions of its debt agreements. As a wholly owned subsidiary of QCII, our business operations and financial condition could be similarly affected, potentially impacting our credit ratings and access to capital
markets.

QCII has $850 million available to it under a revolving credit facility (referred to as the Credit Facility), which is
currently undrawn and which expires in October 2010. The Credit Facility contains various limitations, including a restriction on using any proceeds from the facility to pay settlements or judgments relating to the securities actions discussed in
Note 5Commitments and Contingencies to our condensed consolidated financial statements in Item 1 of Part I of this report. The Credit Facility is guaranteed by QSC and is secured by a senior lien on our stock.

On October 4, 2006, QCIIs Board of Directors approved a stock repurchase program for up to $2 billion of QCIIs common stock over two
years. It is QCIIs intention to fully achieve this plan over this period, while reviewing, on a regular basis, opportunities to enhance shareholder returns. For the three and six months ended June 30, 2007, QCII repurchased
31 million and 80 million shares, respectively, of its common stock under this program at a weighted average price per share of $9.35 and $8.70, respectively. As of June 30, 2007, QCII had repurchased a total of $905 million of common
stock under this program; thus $1.095 billion remained available for stock repurchases.

Long-Term View

We have historically operated with a working capital deficit due to our practice of declaring and paying regular cash dividends and it is likely that we
will operate with a working capital deficit in the future. As discussed below, we continue to generate substantial cash from operations. We believe that cash provided by operations, combined with our current cash position and continued access to
capital markets to refinance our current portion of debt, should allow us to meet our cash requirements for the foreseeable future.

We may
periodically need to obtain financing in order to meet our debt obligations as they come due. We may also need to obtain additional financing or investigate other methods to generate cash (such as further cost reductions or the sale of assets) if
revenue and cash provided by operations decline, if economic conditions weaken, if competitive pressures increase or if we or QCII become subject to significant judgments, settlements and/or tax payments as further discussed in Note
5Commitments and Contingencies to our condensed consolidated financial statements in Item 1 of Part I of this report. In the event of an adverse outcome in one or more of these matters, we or QCII could be required to make significant
payments that may cause us to draw down significantly on our cash balances. The magnitude of any settlements or judgments resulting from these



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actions could materially and adversely affect QCIIs financial condition and ability to meet its debt obligations, potentially impacting its credit
ratings, its ability to access capital markets and its compliance with debt covenants. As a wholly owned subsidiary of QCII, our business operations and financial condition could be similarly affected, potentially impacting our credit ratings and
access to capital markets.

The Credit Facility makes available to QCII $850 million of additional credit subject to certain
restrictions as described below and is currently undrawn. This facility has a cross payment default provision, and this facility and certain other debt issues of QCII and its other subsidiaries also have cross acceleration provisions. When present,
such provisions could have a wider impact on liquidity than might otherwise arise from a default or acceleration of a single debt instrument. These provisions generally provide that a cross default under these debt instruments could occur if:



| |  |  | QCII fails to pay any indebtedness when due in an aggregate principal amount greater than $100 million;
| | - |  | -------------------------------------------------------------------------------------------------------



| |  |  | any indebtedness is accelerated in an aggregate principal amount greater than $100 million; or
| | - |  | ----------------------------------------------------------------------------------------------



| |  |  | judicial proceedings are commenced to foreclose on any of QCIIs assets that secure indebtedness in an aggregate principal amount greater than
$100 million.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------

Upon such a cross default, the creditors of a material amount of QCIIs debt may elect to
declare that a default has occurred under their debt instruments and to accelerate the principal amounts due such creditors. Cross acceleration provisions are similar to cross default provisions, but permit a default in a second debt instrument to
be declared only if in addition to a default occurring under the first debt instrument, the indebtedness due under the first debt instrument is actually accelerated. As a wholly owned subsidiary of QCII, in the event of such a cross-default or
cross-acceleration, our business operations and financial condition could be affected, potentially impacting our credit ratings and access to the capital markets. In addition, the Credit Facility contains various limitations, including a restriction
on using any proceeds from the facility to pay settlements or judgments relating to the securities actions discussed in Note 5Commitments and Contingencies to our condensed consolidated financial statements in Item 1 of Part I of this
report.

Historical View

The
following table summarizes cash flow activities for the six months ended June 30, 2007 and 2006:



|                                 |  |                           |       |      |   |                     |  |   |         |   |  |     |   
|-------------------------------- |  | ------------------------- | ----- | ---- | - | ------------------- |  | - | ------- | - |  | --- | --
|                                 |  | Six Months Ended June 30, |      
|                                 |  | 2007                      |       | 2006 |   | Increase/(Decrease) |  |   | %Change |  
|                                 |  | (Dollars in millions)     |      
|Cash flows:                      |  |                           |       |      |   |                     |  |   |         |   |  |     |   
|Provided by operating activities |  | $                         | 1,651 |      | $ | 1,436               |  | $ | 215     |   |  | 15  | % 
|Used for investing activities    |  |                           | 502   |      |   | 598                 |  |   | (96     | ) |  | (16 | )%
|Used for financing activities    |  |                           | 1,031 |      |   | 896                 |  |   | 135     |   |  | 15  | % 

Operating Activities

Cash provided by operating activities increased primarily due to lower cost of sales and SG&A expenses.

Investing Activities

Cash used for
investing activities decreased primarily due to lower capital expenditures resulting from a change in the timing of spending initiatives. However, as discussed above under the heading Near-Term View, we expect our 2007 capital
expenditures to approximate our 2006 level.



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Financing Activities

During the second quarter of 2007, we took the following measures to improve our capital structure:



| |  |  | On May 16, 2007, we issued $500 million aggregate principal amount of notes that bear interest at 6.5% per year and are due in 2017. The net proceeds of
approximately $493 million from the issuance have been or will be used for general corporate purposes, including repayment of indebtedness and funding and refinancing investments in our telecommunications assets;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | On June 4, 2007, we redeemed $250 million aggregate principal amount of our 8 7/8% Debentures due June 1, 2031; and
| | - |  | -------------------------------------------------------------------------------------------------------------------



| |  |  | On June 7, 2007, we redeemed $70 million aggregate principal amount of our 6.0% Notes due 2007.
| | - |  | -----------------------------------------------------------------------------------------------

Dividend payments to QSC were $304 million higher for the six months ended June 30, 2007 compared to the same period in 2006.

Letters of Credit

As of June 30, 2007,
we had outstanding letters of credit of approximately $57 million.

Credit Ratings

The table below summarizes our long-term debt ratings as of June 30, 2007:



|        |  |              
|------- |  | -------------
|        |  | June 30, 2007
|Moodys |  | Ba1          
|S&P     |  | BBB-         
|Fitch   |  | BBB-         

On June 7, 2007, S&P raised its rating from BB+ to BBB-, reflecting the only change in
the credit ratings above since December 31, 2006.

Debt ratings by the various rating agencies reflect each agencys opinion of
the ability of the issuers to repay debt obligations as they come due. In general, lower ratings result in higher borrowing costs and/or impaired ability to borrow. A security rating is not a recommendation to buy, sell, or hold securities and may
be subject to revision or withdrawal at any time by the assigning rating organization.

Risk Management

We are exposed to market risks arising from changes in interest rates. The objective of our interest rate risk management program is to manage the level
and volatility of our interest expense. We may employ derivative financial instruments to manage our interest rate risk exposure.

Approximately $750 million of floating-rate debt was exposed to changes in interest rates as of June 30, 2007 and December 31, 2006. This exposure is linked to LIBOR. A hypothetical increase of 100 basis points in LIBOR would not
have had a material effect on pre-tax interest expense for the six months ended June 30, 2007.

As of June 30, 2007, our cash and
investments managed by QSC included $296 million of highly liquid instruments and $95 million of auction rate securities. As interest rates change, so will the interest income derived from these instruments. Assuming that these investment
balances were to remain constant, a hypothetical decrease of 100 basis points in interest rates would not have a material effect on our earnings.



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Off-Balance Sheet Arrangements

There were no substantial changes to our off-balance sheet arrangements or contractual commitments in the six months ended June 30, 2007, when compared to the disclosures provided in our Annual Report on
Form 10-K for the year ended December 31, 2006 (our 2006 Form 10-K).

Critical Accounting Policies and Estimates

In our 2006 Form 10-K, we identified certain policies and estimates as critical to our business operations and the understanding of our past or
present results of operations. These policies and estimates are considered critical because they had a material impact, or they have the potential to have a material impact, on our financial statements and because they require significant judgments,
assumptions or estimates. Our preparation of financial statements requires us to make estimates and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities at the date of our financial
statements, and the reported amounts of revenue and expenses during the reporting period.

In adopting Financial Accounting Standards Board
Interpretation No. 48, Accounting for Uncertainty in Income Taxes (FIN 48), effective January 1, 2007, we changed our methodology for estimating our potential liability for income tax positions for which we are
uncertain regardless of whether taxing authorities will challenge our interpretation of the income tax laws. Previously, we recorded a liability computed at the statutory income tax rate if we determined that (i) we did not believe that we are
more likely than not to prevail on an uncertainty related to the timing of recognition for an item, or (ii) we did not believe that it is probable that we will prevail and the uncertainty is not related to the timing of
recognition. However, under FIN 48 we do not recognize any benefit in our financial statements for any uncertain income tax position if we believe the position in the aggregate has less than a 50% likelihood of being sustained. If we
believe that there is greater than 50% likelihood that the position will be sustained, we recognize a benefit in our financial statements equal to the largest amount that we believe is more likely than not to be sustained upon audit.

The tax law is subject to varied interpretations, and we have taken positions related to certain matters where the law is subject to interpretation and
where substantial amounts of income tax benefits have been recorded in our financial statements. As new interpretations of the relevant tax laws are promulgated and as we discuss our interpretations with taxing authorities, we may in the future
change our assessments of the likelihood of sustainability or of the amounts that may or may not be sustained upon audit. And as our assessments change, the impact to our financial statements could be material. We believe that the
estimates, judgments and assumptions made when accounting for these matters are reasonable, based on information available at the time they are made. However, there can be no assurance that actual results will not differ from those estimates.

Special Note Regarding Forward-Looking Statements

This Form 10-Q contains or incorporates by reference forward-looking statements about our financial condition, results of operations and business. These statements include, among others:



| |  |  | statements concerning the benefits that we expect will result from our business activities and certain transactions we have completed, such as increased revenue,
decreased expenses and avoided expenses and expenditures; and
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | statements of our expectations, beliefs, future plans and strategies, anticipated developments and other matters that are not historical facts.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------

These statements may be made expressly in this document or may be incorporated by reference to other documents we have
filed or will file with the SEC. You can find many of these statements by looking for words such as may, would, could, should, plan, believes, expects,
anticipates, estimates, or similar expressions used in this document or in documents incorporated by reference in this document.



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These forward-looking statements are subject to numerous assumptions, risks and uncertainties that may
cause our actual results to be materially different from any future results expressed or implied by us in those statements. Some of these risks are described in Risk Factors in Item 1A of Part II of this report. These risk factors
should be considered in connection with any written or oral forward-looking statements that we or persons acting on our behalf may issue. Given these uncertainties, we caution investors not to unduly rely on our forward-looking statements. We do not
undertake any obligation to review or confirm analysts expectations or estimates or to release publicly any revisions to any forward-looking statements to reflect events or circumstances after the date of this document or to reflect the
occurrence of unanticipated events. Further, the information about our intentions contained in this document is a statement of our intentions as of the date of this document and is based upon, among other things, the existing regulatory environment,
industry conditions, market conditions and prices, the economy in general and our assumptions as of such date. We may change our intentions, at any time and without notice, based upon any changes in such factors, in our assumptions or otherwise.



|ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|------- | ----------------------------------------------------------

The information under the caption Risk Management in Managements Discussion and Analysis of Financial Condition and Results of Operations in Item 2 of Part I of this report is incorporated herein by
reference.



|ITEM 4. | CONTROLS AND PROCEDURES
|------- | -----------------------

The effectiveness of our
or any system of disclosure controls and procedures is subject to certain limitations, including the exercise of judgment in designing, implementing and evaluating the controls and procedures, the assumptions used in identifying the likelihood of
future events and the inability to eliminate misconduct completely. As a result, there can be no assurance that our disclosure controls and procedures will detect all errors or fraud. By their nature, our or any system of disclosure controls and
procedures can provide only reasonable assurance regarding managements control objectives.

Under the supervision and with the
participation of our management, including our Chief Executive Officer and Chief Financial Officer, we evaluated the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities
Exchange Act of 1934, or the Exchange Act) as of June 30, 2007. On the basis of this review, our management, including our Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures
are designed, and are effective, to give reasonable assurance that the information required to be disclosed by us in reports that we file under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the
rules and forms of the SEC and to ensure that information required to be disclosed in the reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial
Officer, in a manner that allows timely decisions regarding required disclosure.

There were no changes in our internal control over
financial reporting that occurred in the second quarter of 2007 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.



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PART IIOTHER INFORMATION



|ITEM 1. | LEGAL PROCEEDINGS
|------- | -----------------

The information contained in
Note 5Commitments and Contingencies to our condensed consolidated financial statements in Item 1 of Part I of this report is incorporated herein by reference.

Department of Justice Investigation

On July 9, 2002, QCII was informed by the U.S.
Attorneys Office for the District of Colorado of a criminal investigation of its business. QCII believes the U.S. Attorneys Office has investigated various matters that include transactions related to the various adjustments and
restatements described in QCIIs Annual Report on Form 10-K/A for the fiscal year ended December 31, 2002, transactions between QCII and certain of its vendors and certain investments in the securities of those vendors by individuals
associated with QCII, and certain prior disclosures made by QCII. QCII believes that the U.S. Attorneys Offices investigation of it is complete.



|ITEM 1A. | RISK FACTORS
|-------- | ------------

Risks Affecting Our Business

Increasing competition, including product substitution, continues to cause access line losses, which could adversely affect our operating results and financial
performance.

We compete in a rapidly evolving and highly competitive market, and we expect competition to continue to intensify. We
are facing greater competition in our core local business from cable companies, wireless providers (including one of our affiliates), facilities-based providers using their own networks as well as those leasing parts of our network, and resellers.
In addition, regulatory developments over the past few years have generally increased competitive pressures on our business. Due to some of these and other factors, we continue to lose access lines.

We are consistently evaluating our responses to these competitive pressures. Our recent responses include product bundling and packaging, QCIIs and
our digital voice advertising campaign and focusing on customer service. However, we may not be successful in these efforts. We may not have sufficient resources to distinguish our service levels from those of our competitors, and we may
not be successful in integrating our product offerings, especially satellite video services for which we act as a reseller. Even if we are successful, these initiatives may not be sufficient to offset our continuing loss of access lines. If these
initiatives are unsuccessful or insufficient and our revenue declines significantly without corresponding cost reductions, this will cause a significant deterioration to our results of operations and financial condition and adversely affect our
ability to service debt and pay other obligations.

Consolidation among participants in the telecommunications industry may allow our competitors to
compete more effectively against us, which could adversely affect our operating results and financial performance.

The
telecommunications industry is experiencing an ongoing trend towards consolidation, and several of our competitors have consolidated with other telecommunications providers. This trend results in competitors that are larger and better financed and
affords our competitors increased resources and greater geographical reach, thereby enabling those competitors to compete more effectively against us. We have begun to experience and expect further increased pressures as a result of this trend and
in turn have been and may continue to be forced to respond with lower profit margin product offerings and pricing plans in an effort to retain and attract customers. These pressures could adversely affect our operating results and financial
performance.



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Rapid changes in technology and markets could require substantial expenditure of financial and other resources in
excess of contemplated levels, and any inability to respond to those changes could reduce our market share.

The telecommunications
industry is experiencing significant technological changes, and our ability to execute our business plans and compete depends upon our ability to develop and deploy new products and services, such as broadband data and video services. The
development and deployment of new products and services could also require substantial expenditure of financial and other resources in excess of contemplated levels. If we are not able to develop new products and services to keep pace with
technological advances, or if those products and services are not widely accepted by customers, our ability to compete could be adversely affected and our market share could decline. Any inability to keep up with changes in technology and markets
could also adversely affect the trading price of our debt securities and our ability to service our debt.

Third parties may claim we infringe upon
their intellectual property rights and defending against these claims could adversely affect our profit margins and our ability to conduct business.

From time to time, we receive notices from third parties or are named in lawsuits filed by third parties claiming we have infringed or are infringing upon their intellectual property rights. We may receive similar
notices or be involved in similar lawsuits in the future. Responding to these claims may require us to expend significant time and money defending our use of affected technology, may require us to enter into royalty or licensing agreements on less
favorable terms than we could otherwise obtain or may require us to pay damages. If we are required to take one or more of these actions, our profit margins may decline. In addition, in responding to these claims, we may be required to stop selling
or redesign one or more of our products or services, which could significantly and adversely affect the way we conduct business.

Risks Relating to
Legal and Regulatory Matters

Any adverse outcome of the material matters pending against QCII and us, which include the remaining securities
actions and the KPNQwest litigation, could have a material adverse impact on our financial condition and operating results, on the trading price of our debt securities and on our ability to access the capital markets.

As described in Note 5Commitments and Contingencies to our condensed consolidated financial statements in Item 1 of Part I of this report, the
remaining securities actions and the KPNQwest litigation present material and significant risks to QCII and us. In the aggregate, the plaintiffs in the remaining securities actions and the KPNQwest litigation, as well as persons who, at their
request, were excluded from the settlement class in the consolidated securities action, seek billions of dollars in damages. In addition, the outcome of one or more of these matters could have a negative impact on the outcomes of the other actions.
Further, the size, scope and nature of the restatements of QCIIs consolidated financial statements for 2001 and 2000, which are described in QCIIs Annual Report on Form 10-K/A for the fiscal year ended December 31, 2002, affect the
risks presented by many of these matters as they involve, among other things, QCIIs prior accounting practices and related disclosures. Plaintiffs in certain of the remaining securities actions have alleged QCIIs restatement of items in
support of their claims. QCII and we continue to defend against the remaining securities actions and the KPNQwest litigation vigorously and are currently unable to provide any estimate as to the timing of their resolution.

We can give no assurance as to the impacts on QCIIs and our financial results or financial condition that may ultimately result from these matters.
With respect to the remaining securities actions and any additional actions that may be brought by parties who, at their request, were excluded from the settlement class in the consolidated securities action but who have not yet filed suit, QCII has
recorded reserves in its financial statements for the minimum estimated amount of loss it believes is probable. However, the ultimate outcomes of those claims are still uncertain, and the amount of loss QCII ultimately incurs could be substantially
more than the reserves it has provided. If the recorded reserves are insufficient, QCII will need to record additional charges



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to its consolidated statement of operations in future periods. In addition, settlements or judgments in several of these actions substantially in excess of
QCIIs recorded reserves could have a significant impact on QCII and us. The magnitude of such settlements or judgments resulting from these matters could materially and adversely affect QCIIs financial condition and ability to meet its
debt obligations, potentially impacting its credit ratings, its ability to access capital markets and its compliance with debt covenants. In addition, the magnitude of any such settlements or judgments may cause QCII to draw down significantly on
its cash balances, which might force it to obtain additional financing or explore other methods to generate cash. Such methods could include issuing additional securities or selling assets. As a wholly owned subsidiary of QCII, our business
operations and financial condition could be similarly affected.

Further, there are other material proceedings pending against QCII and us
as described in Note 5Commitments and Contingencies to our condensed consolidated financial statements in Item 1 of Part I of this report that, depending on their outcome, may have a material adverse effect on QCIIs and our
financial position. Thus, we can give no assurances as to the impacts on QCIIs and our financial results or financial condition as a result of these matters.

Civil actions against QCIIs former officers and employees could reduce investor confidence in QCII and us and cause the trading price of our debt securities to decline.

As a result of QCIIs past accounting issues, investor confidence in QCII and us has suffered and could suffer further. Although QCII has consummated
a settlement with the SEC concerning its investigation of QCII, in March 2005, the SEC filed suit against QCIIs former chief executive officer, Joseph Nacchio, and other former QCII officers and employees. Further, in December 2005, a
criminal indictment was filed against Mr. Nacchio charging him with 42 counts of insider trading.

A trial took place in
March and April 2007 in connection with the criminal insider trading charges against Mr. Nacchio. Mr. Nacchio was convicted on 19 of 42 counts. In July 2007, Mr. Nacchio was sentenced to six years incarceration, fined $19
million and ordered to forfeit $52 million. A trial could also take place in the pending SEC lawsuit against Mr. Nacchio and others. Evidence introduced at such trial and in other matters may result in further scrutiny of us. The existence of
this heightened scrutiny could adversely affect investor confidence in QCII and us and cause the trading price of our debt securities to decline.

We
operate in a highly regulated industry and are therefore exposed to restrictions on our manner of doing business and a variety of claims relating to such regulation.

Our operations are subject to significant federal regulation, including the Communications Act of 1934, as modified by the Telecommunications Act of 1996,
or the Telecommunications Act, and the Federal Communications Commission, or FCC, regulations thereunder. We are also subject to the applicable laws and regulations of various states, including regulation by public utility commissions, or PUCs, and
other state agencies. Federal laws and FCC regulations generally apply to regulated interstate telecommunications (including international telecommunications that originate or terminate in the United States), while state regulatory authorities
generally have jurisdiction over regulated telecommunications services that are intrastate in nature. The local competition aspects of the Telecommunications Act are subject to FCC rulemaking, but the state regulatory authorities play a significant
role in implementing those FCC rules. Generally, we must obtain and maintain certificates of authority from regulatory bodies in most states where we offer regulated services and must obtain prior regulatory approval of rates, terms and conditions
for our intrastate services, where required. Our businesses are subject to numerous, and often quite detailed, requirements under federal, state and local laws, rules and regulations. Accordingly, we cannot ensure that we are always in compliance
with all these requirements at any single point in time. The agencies responsible for the enforcement of these laws, rules and regulations may initiate inquiries or actions based on their own perceptions of our conduct, or based on customer
complaints.



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Regulation of the telecommunications industry is changing rapidly, and the regulatory environment varies
substantially from state to state. A number of state legislatures and state PUCs have adopted reduced or modified forms of regulation for retail services. This is generally beneficial to us because it reduces regulatory costs and regulatory filing
and reporting requirements. These changes also generally allow more flexibility for new product introduction and enhance our ability to respond to competition. At the same time, some of the changes, occurring at both the state and federal level, may
have the potential effect of reducing some regulatory protections, including having FCC-approved tariffs that include rates, terms and conditions. These changes may necessitate the need for customer-specific contracts to address matters previously
covered in our tariffs. Despite these regulatory changes, a substantial portion of our local voice services revenue remains subject to FCC and state PUC pricing regulation, which could expose us to unanticipated price declines. There can be no
assurance that future regulatory, judicial or legislative activities will not have a material adverse effect on our operations, or that regulators or third parties will not raise material issues with regard to our compliance or noncompliance with
applicable regulations.

All of our operations are also subject to a variety of environmental, safety, health and other governmental
regulations. We monitor our compliance with federal, state and local regulations governing the discharge and disposal of hazardous and environmentally sensitive materials, including the emission of electromagnetic radiation. Although we believe that
we are in compliance with such regulations, any such discharge, disposal or emission might expose us to claims or actions that could have a material adverse effect on our business, financial condition and operating results.

Risks Affecting Our Liquidity

QCIIs high debt levels
pose risks to our viability and may make us more vulnerable to adverse economic and competitive conditions, as well as other adverse developments.

Our ultimate parent, QCII, continues to carry significant debt. As of June 30, 2007, our consolidated debt was approximately $7.9 billion, which was included in QCIIs consolidated debt of $14.5 billion as
of that date. Approximately $2.1 billion of QCIIs debt, which includes approximately $800 million of our debt obligations, comes due over the next three years. In addition, holders of the $1.265 billion of QCIIs 3.50%
Convertible Senior Notes due 2025 may elect to convert the principal of their notes into cash during periods when specified, market-based conversion requirements are met. However, QCII does not anticipate holders will make such an election
because the market price of these notes is currently above the estimated conversion value. While we currently believe QCII and we will have the financial resources to meet our obligations when they come due, we cannot anticipate what QCIIs and
our future condition will be. We may have unexpected costs and liabilities and we may have limited access to financing. In addition, on October 4, 2006, QCIIs Board of Directors approved a stock repurchase program for up to $2 billion of
QCIIs common stock over two years. Cash used by QCII in connection with any purchases of its common stock would not be available for other purposes, including the repayment of debt.

We may periodically need to obtain financing in order to meet our debt obligations as they come due. We may also need to obtain additional financing or
investigate other methods to generate cash (such as further cost reductions or the sale of assets) if revenue and cash provided by operations decline, if economic conditions weaken, if competitive pressures increase or if QCII or we become subject
to significant judgments, settlements and/or tax payments as further discussed in Note 5Commitments and Contingencies to our condensed consolidated financial statements in Item 1 of Part I of this report and in Managements
Discussion and Analysis of Financial Condition and Results of OperationsLiquidity and Capital Resources in Item 2 of Part I of this report. We can give no assurance that this additional financing will be available on terms that are
acceptable. Also, we may be impacted by factors relating to or affecting our liquidity and capital resources due to perception in the market, impacts on our credit ratings or provisions in our financing agreements that may restrict our flexibility
under certain conditions.



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QCIIs $850 million revolving credit facility (referred to as the Credit Facility), which is
currently undrawn, has a cross payment default provision, and the Credit Facility and certain other debt issues of QCII and its other subsidiaries have cross acceleration provisions. When present, these provisions could have a wider impact on
liquidity than might otherwise arise from a default or acceleration of a single debt instrument. As a subsidiary of QCII, any such event could adversely affect our ability to conduct business or access the capital markets and could adversely impact
our credit ratings. In addition, the Credit Facility contains various limitations, including a restriction on using any proceeds from the facility to pay settlements or judgments relating to the securities actions discussed in Note
5Commitments and Contingencies to our condensed consolidated financial statements in Item 1 of Part I of this report.

The
degree to which we, together with QCII, are leveraged may have other important limiting consequences, including the following:



| |  |  | placing us at a competitive disadvantage as compared with our less leveraged competitors;
| | - |  | -----------------------------------------------------------------------------------------



| |  |  | making us more vulnerable to downturns in general economic conditions or in any of our businesses;
| | - |  | --------------------------------------------------------------------------------------------------



| |  |  | limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; and
| | - |  | ---------------------------------------------------------------------------------------------------------------------------



| |  |  | impairing our ability to obtain additional financing in the future for working capital, capital expenditures or general corporate purposes.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------

We may be unable to significantly reduce the substantial capital requirements or operating expenses necessary to continue to
operate our business, which may in turn affect our operating results.

The industry in which we operate is capital intensive, and as
such we anticipate that our capital requirements will continue to be significant in the coming years. Although we have reduced our capital expenditures and operating expenses over the past few years, we may be unable to further significantly reduce
these costs, even if revenue in some areas of our business is decreasing. While we believe that our current level of capital expenditures will meet both our maintenance and our core growth requirements going forward, this may not be the case if
circumstances underlying our expectations change.

Declines in the value of QCIIs qualified pension plan assets, or unfavorable changes in laws
or regulations that govern pension plan funding, could require it to provide significant amounts of funding for its qualified pension plan.

Our employees participate in a qualified defined benefit pension plan sponsored by QCII. While QCII does not expect to be required to make material cash contributions to its qualified defined benefit pension plan in the near term based upon
current actuarial analyses and forecasts, a significant decline in the value of qualified pension plan assets in the future or unfavorable changes in laws or regulations that govern pension plan funding could materially change the timing and amount
of required pension funding. As a result, QCII and we may be required to fund QCIIs qualified defined benefit pension plan with cash from operations, perhaps by a material amount.

The cash needs of our affiliated companies consume a significant amount of the cash we generate.

We regularly declare and pay dividends to our direct parent, QSC. We may declare and pay dividends in excess of our earnings to the extent permitted by applicable law, which may consume a significant amount of the cash we generate. Our debt
covenants do not limit the amount of dividends we can pay to our parent.



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Our debt agreements and the debt agreements of QCII allow us and QCII to incur significantly more debt, which could
exacerbate the other risks described in this report.

The terms of QCIIs and our debt instruments permit both QCII and us to
incur additional indebtedness. Additional debt may be necessary for many reasons, including to adequately respond to competition, to comply with regulatory requirements related to our service obligations or for financial reasons alone. Incremental
borrowings or borrowings at maturity on terms that impose additional financial risks to our various efforts to improve our financial condition and results of operations could exacerbate the other risks described in this report.

Other Risks Relating to Qwest

If conditions or assumptions
differ from the judgments, assumptions or estimates used in our critical accounting policies, the accuracy of our financial statements and related disclosures could be affected.

The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States, or GAAP,
requires management to make judgments, assumptions and estimates that affect the amounts reported in our consolidated financial statements and accompanying notes. Our critical accounting policies, which are described in our 2006 Form 10-K and under
the heading Critical Accounting Policies and Estimates in Item 2 of Part I of this report, describe those significant accounting policies and methods used in the preparation of our consolidated financial statements that are
considered critical because they require judgments, assumptions and estimates that materially impact our consolidated financial statements and related disclosures. As a result, if future events or assumptions differ significantly from
the judgments, assumptions and estimates in our critical accounting policies, these events or assumptions could have a material impact on our consolidated financial statements and related disclosures.

Taxing authorities may determine we owe additional taxes relating to various matters, which could adversely affect our financial results.

We are included in the consolidated federal income tax return of QCII. As such, we could be severally liable for tax examinations and adjustments
attributed to other members of the QCII affiliated group. As a significant taxpayer, QCII is subject to frequent and regular audits from the Internal Revenue Service, or IRS, as well as from state and local tax authorities. These audits could
subject us to risks due to adverse positions that may be taken by these tax authorities. See Note 5Commitments and Contingencies to our condensed consolidated financial statements in Item 1 of Part I of this report for examples of legal
proceedings involving some of these adverse positions. In June 2006, QCII received notices of proposed adjustments on several significant issues for its 2002-2003 audit cycle, including a proposed adjustment disallowing a loss recognized by
QCII relating to the sale of its DEX directory publishing business. There is no assurance that QCII and the IRS will reach settlements on any of these issues or that, if QCII does reach settlements, the terms will be favorable to QCII.

Because prior to 1999 QCII was a member of affiliated groups filing consolidated U.S. federal income tax returns, QCII could be severally liable for
tax examinations and adjustments not directly applicable to current members of the QCII affiliated group. Tax sharing agreements have been executed between QCII and previous affiliates, and QCII believes the liabilities, if any, arising from
adjustments to previously filed returns would be borne by the affiliated group member determined to have a deficiency under the terms and conditions of such agreements and applicable tax law. Generally, QCII has not provided for liabilities of
former affiliated members or for claims they have asserted or may assert against QCII.

While QCII believes its tax reserves adequately
provide for the associated tax contingencies, QCIIs tax audits and examinations may result in tax liabilities that differ materially from those QCII has recorded in its consolidated financial statements. Also, the ultimate outcomes of all of
these matters are uncertain, and QCII can give no assurance as to whether an adverse result from one or more of them will have a material effect on its financial results or its net operating loss carryforwards, which could in turn affect our
financial condition and operating results to the extent the matters affect us.



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If we fail to extend or renegotiate our collective bargaining agreements with our labor unions as they expire from
time to time, or if our unionized employees were to engage in a strike or other work stoppage, our business and operating results could be materially harmed.

We are a party to collective bargaining agreements with our labor unions, which represent a significant number of our employees. In August 2005, we reached agreements with the Communications Workers of America
and the International Brotherhood of Electrical Workers on three-year labor agreements. Each of these agreements was ratified by union members and expires on August 16, 2008. Although we believe that our relations with our employees are
satisfactory, no assurance can be given that we will be able to successfully extend or renegotiate our collective bargaining agreements as they expire from time to time. The impact of future negotiations, including changes in wages and benefit
levels, could have a material impact on our financial results. Also, if we fail to extend or renegotiate our collective bargaining agreements, if disputes with our unions arise, or if our unionized workers engage in a strike or other work stoppage,
we could incur higher ongoing labor costs or experience a significant disruption of operations, which could have a material adverse effect on our business.

As a result of recent regulatory developments or other business needs, we may merge or combine operations with one or more of QCIIs other subsidiaries, which could adversely affect the trading price of our debt securities and/or
our credit ratings.

In February 2007, the FCC issued an order that freed us from some regulatory obligations under the
Telecommunications Act. Among other things, the order gives us more flexibility to integrate our local operations with QCIIs long-distance operations and gives QCII more flexibility to integrate the operations of its subsidiaries that provide
shared services to us and QCIIs other subsidiaries. In light of this order and consistent with QCIIs continuing strategy to streamline and simplify its corporate structure to gain operational efficiencies, QCII may engage in mergers,
dissolutions and operational consolidations affecting one or more of its subsidiaries, including us. We do not expect these changes to adversely affect our consolidated financial condition or results of operations. However, if we are involved in any
such changes and/or if we are unable to successfully integrate the affected operations, the trading price of our debt securities and/or credit ratings could be adversely affected. Additionally, the resulting consolidated financial statements could
be substantially different from our historical consolidated financial statements. Therefore, our historical financial performance might not be indicative of future financial performance.



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|ITEM 6. | EXHIBITS
|------- | --------

Exhibits identified in parentheses below
are on file with the SEC and are incorporated herein by reference. All other exhibits are provided as part of this electronic submission.



|              |  |                                                                                                                                                                                                                                                                                                    
|------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Description                                                                                                                                                                                                                                                                                        
|              | 
|(3.1)         |  | Restated Articles of Incorporation of Qwest Corporation (incorporated by reference to Qwest Corporations Annual Report on Form 10-K for the year ended December 31, 1997,
File No. 001-03040).                                                                                                    
|              | 
|(3.2)         |  | Articles of Amendment to the Articles of Incorporation of Qwest Corporation (incorporated by reference to Qwest Corporations Quarterly Report on Form 10-Q for the quarter ended June
30, 2000, File No. 001-03040).                                                                              
|              | 
|(3.3)         |  | Amended and Restated Bylaws of Qwest Corporation (incorporated by reference to Qwest Corporations Annual Report on Form 10-K for the year ended December 31, 2002,
File No. 001-03040).                                                                                                           
|              | 
|(4.1)         |  | Indenture, dated as of April 15, 1990, by and between Mountain States Telephone and Telegraph Company and The First National Bank of Chicago (incorporated by reference to Qwest
Corporations Annual Report on Form 10-K for the year ended December 31, 2002, File No. 001-03040).               
|              | 
|(4.2)         |  | First Supplemental Indenture, dated as of April 16, 1991, by and between U S WEST Communications, Inc. and The First National Bank of Chicago (incorporated by reference to Qwest
Corporations Annual Report on Form 10-K for the year ended December 31, 2002, File No. 001-03040).              
|              | 
|(4.3)         |  | Indenture, dated as of October 15, 1999, by and between U S West Communications, Inc. and Bank One Trust Company, N.A. (incorporated by reference to Qwest Corporations
Annual Report on Form 10-K for the year ended December 31, 1999, File No. 001-03040).                                     
|              | 
|(4.4)         |  | Officers Certificate of Qwest Corporation, dated as of March 12, 2002 (including forms of 87/8% notes due March 15, 2012) (incorporated by reference to Qwest Corporations Form S-4, File No. 333-115119).                                                                                       
|              | 
|(4.5)         |  | First Supplemental Indenture, dated as of August 19, 2004, by and between Qwest Corporation and U.S. Bank National Association (incorporated by reference to Qwest Communications
International Inc.s Quarterly Report on Form 10-Q for the quarter ended September 30, 2004, File No. 001-15577).
|              | 
|(4.6)         |  | Second Supplemental Indenture, dated as of November 23, 2004, by and between Qwest Corporation and U.S. Bank National Association (incorporated by reference to Qwest
Corporations Current Report on Form 8-K filed November 23, 2004, File No. 001-03040).                                       
|              | 
|(4.7)         |  | Third Supplemental Indenture, dated as of June 17, 2005, by and between Qwest Corporation and U.S. Bank National Association (incorporated by reference to Qwest Corporations Current Report
on Form 8-K filed June 23, 2005, File No. 001-03040).                                                
|              | 
|(4.8)         |  | Fourth Supplemental Indenture, dated August 8, 2006, by and between Qwest Corporation and U.S. Bank National Association (incorporated by reference to Qwest Corporations Current Report on
Form 8-K filed August 8, 2006, File No. 001-03040).                                                   
|              | 
|(4.9)         |  | Fifth Supplemental Indenture, dated May 16, 2007, by and between Qwest Corporation and U.S. Bank National Association (incorporated by reference to Qwest Corporations Current Report
on Form 8-K filed May 18, 2007, File No. 001-03040).                                                        
|              | 
|(10.1)        |  | Registration Rights Agreement, dated August 8, 2006, by and among Qwest Corporation and the initial purchasers listed therein (incorporated by reference to Qwest Corporations Current
Report on Form 8-K filed August 8, 2006, File No. 001-03040).                                              



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|              |  |                                                                                                                                                                                                                                           
|------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Description                                                                                                                                                                                                                               
|              | 
|(10.2)        |  | Registration Rights Agreement, dated May 16, 2007, among Qwest Corporation and the initial purchasers listed therein (incorporated by reference to Qwest Corporations Current Report on Form
8-K filed May 18, 2007, File No. 001-03040).
|              | 
|12            |  | Calculation of Ratio of Earnings to Fixed Charges.                                                                                                                                                                                        
|              | 
|31.1          |  | Chief Executive Officer Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                          
|              | 
|31.2          |  | Chief Financial Officer Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                          
|              | 
|32            |  | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                   

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(    ) Previously filed.

In accordance with Item 601(b)(4)(iii)(A) of Regulation S-K, copies of certain instruments defining the rights of holders of certain
of our long-term debt are not filed herewith. Pursuant to this regulation, we hereby agree to furnish a copy of any such instrument to the SEC upon request.



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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned thereunto duly authorized.



QWEST CORPORATIONBy:

/s/    JOHN W.
RICHARDSONJohn W. Richardson Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer and Duly Authorized Officer)


August 1, 2007



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