Good day, everyone, and welcome to the Qwest Fourth Quarter 2010 Earnings Results Conference Call. [Operator Instructions] At this time, I'd like to turn the conference over to Mr. Kurt Fawkes, Senior Vice President, Investor Relations. Please go ahead, sir.

Okay. Thank you, Miranda. Good morning, everybody, and welcome to Qwest fourth quarter earnings call. We'll begin the call this morning with a few comments on the quarter from Ed Mueller, our Chairman and CEO. Ed will be followed by Teresa Taylor, our COO, who will review segment results. And then Joe Euteneuer, our CFO, will review our consolidated financial results and first quarter outlook. Ed will conclude with some closing remarks before we go to open it up for your questions. As we begin our call, let me point you to Slide 3 and remind everyone that today's discussion contains forward-looking statements. These statements are subject to significant risks and uncertainties, and we discuss these in detail in our periodic filings with the SEC. And of course, I strongly encourage you to thoroughly review our filings. I also want to point out that we do not adopt analyst estimates, nor do we necessarily commit to updating any forward-looking statements that we will be making this morning. To supplement the reporting of our financial information on our call today, we will be discussing certain non-GAAP financial measures, including adjusted EBITDA, adjusted free cash flow and net debt. A full reconciliation of these measures is available on our website. Now, we'll move on to Slide 4 to touch on EPS and some special items that impacted our earnings per share in the quarter. Our reported loss per share for the quarter was $0.09, and that compares to earnings per share of $0.06 in the fourth quarter of 2009. The current quarter includes a $0.15 charge related to the conversion option on the convertible notes, which we redeemed in the fourth quarter. The remaining one-time charges in the quarter total $0.06 per share and include accelerated stock-based compensation, legal merger and severance expenses. Excluding special items, earnings per share were $0.12 in the fourth quarter. That's a 15% improvement compared to $0.08 in the year-ago quarter. For the full year, earnings per share, excluding the special items, were $0.44 per share, compared to $0.38 in 2009. That's a 16% improvement. The earnings improvement in both the fourth quarter and the full year principally reflects stable EBITDA, lower depreciation and pension expense and reduced interest cost. Before any merger-related accounting impacts, depreciation expense is expected to decline again in 2011. With the significant reduction in debt over the past 12 months, we will also have a meaningfully lower interest expense in the coming year again. So with that, I'm going to turn it over to Ed.

Thanks, Kurt. Good morning, everyone, and thank you for joining us today. I want to begin by saying I'm very pleased with our performance for both the quarter and the full year. In light of challenging conditions, we achieved a number of milestones during the year, including record high margins and record low debt levels, and we made significant progress on key initiatives to drive shareholder value. Our investors benefited from a 91% total return in 2010. As we completed the year, we continued to improve top line trends, expand margins, generate significant free cash flow and we achieved our guidance expectations. We continued to see strong growth in our strategic revenue as we aggressively deployed fiber-based broadband services. Strategic revenue is a greater contributor in each of our three business units. Overall, strategic revenue now represents 40% of the company's total revenue. Our effort to improve margins is another area where we had strong success in 2010. For the full year, our adjusted EBITDA margin was once again at its best level since the merger with U S West in 2000. We also continued to strengthen our financial flexibility by improving the balance sheet. Our progress was recognized earlier this year by a rating agency upgrade. During the fourth quarter, we redeemed all of the $1.1 billion outstanding convertible notes. And as of today, we've achieved our stated annual debt reduction goal of $3.5 billion announced in February 2010. In addition, I'm very pleased with the progress we're making toward the completion of our merger with CenturyLink. We have reached several key milestones in the approval process, and we continue to make progress with the remaining agencies and commissions required to review the transaction. To date, we have received approval in 18 states. In addition to the FCC, we have four states remaining to review and approve the transaction. While the pace of regulatory approvals can be difficult to predict, we currently expect to receive all required regulatory approvals in the first quarter. That being the case, we are currently planning toward an April 1 closing date, and activities are well underway in the planning process for the integration of the two companies, including naming the next tiers in the organization structure. Of course, our target dates for regulatory approval and closing could be pushed back as these final processes unfold. But we continue to believe that we will receive all approvals and close by April 1. I will hand it off to Teresa, who will discuss our business unit performance.

Thank you, Ed. Good morning, everyone. I'm very pleased to give you an update on our operations. As we did throughout the year, in the fourth quarter, we demonstrated continued success at improving our profitability and generating significant cash flow. And we delivered on our goal to make progress on our top line revenue trends. Revenue trends are improving in terms of both growth rate and mix. It is also encouraging that these trends occurred in each of our business units for 2010. This broad-based contribution led to a 430 basis point improvement in our normalized annual rate of revenue decline between the fourth quarter of 2009 and the fourth quarter of 2010. In the most recent quarter, solid customer demand for strategic products provided increasing revenue contributions in each of the units. Total strategic revenue grew 7% year-over-year, driven by 18% growth in enterprise IP services, 6% growth in wholesale private line and nearly 75% growth in residential fiber-based Internet subscribers. As you can see on the chart, over the last two years, the strategic revenue share of the overall mix increased 7%, while legacy declined by 8%. I will begin the discussion of our individual business unit performance with the Business Markets segment on Slide 9. Business Markets reported fourth quarter revenues of $1 billion. This was up 1% from the prior year and flat sequentially. The segment benefited from continued demand for IP services and strong data integration revenues. In the quarter, new enterprise sales were up modestly compared to the fourth quarter a year ago and down sequentially due to seasonal factors. The Business Markets group achieved strong customer retention again in the fourth quarter. Strategic revenues increased 6% compared to the fourth quarter of 2009. This was driven by continued strong demand for our MPLS…

Thank you, Teresa. Good morning, everyone, and thank you for joining us today. I am pleased to report that this was another solid quarter, and we successfully achieved all of our guidance objectives for the year. In the fourth quarter and for the full year, we improved year-over-year revenue comparisons, expanded adjusted EBITDA margin and generated strong free cash flow. It is noteworthy that all three business units contributed to the improved revenue trends and improved profitability. We also made substantial progress on the balance sheet. Now let's start by turning to the income statement on Slide 14. In the fourth quarter, consolidated revenues of $2.9 billion declined 3% compared to the prior year. And we met our goal to exit the year with a low single-digit rate of decline. For the full year, revenue declined 4%, which is an improvement over the 6% decline in 2009 after adjusting for the company's Wireless business transition in both years. Consolidated strategic services revenue grew 7% compared to the year-ago quarter. The company is benefiting from an improved product mix. This is due to continued demand for fiber-based broadband services and IP solutions. We maintained a disciplined focus on the bottom line. Operating cost improvements are driven by our ongoing efforts to increase operating efficiency and productivity through balancing workforce to workload and reductions in network facility cost. Excluding special items for the fourth quarter, operating expenses improved 5% compared to the prior year and improved 1% sequentially. For the full year, total normalized operating expense declined 7%. Adjusted EBITDA of $1.1 billion in the fourth quarter was consistent with the year-ago period and the third quarter. Adjusted EBITDA margin of 37.9% expanded 170 basis points over the year. For the full year, adjusted EBITDA was $4.4 billion, increasing 1% from the…

Thank you, Joe. Because this is very likely the last earnings call for Qwest, before we go to your questions, I want to take a moment to thank many of the listeners on our call. I'd like to start by saying that we appreciate the members of our research community who have provided coverage of Qwest over the years. We are pleased that you have elected to invest your time in Qwest, and we have always respected the invaluable insights on Qwest and our industry that you provide to our institutional clients. I want to say a special thank you to all of our shareowners who are participating on our call today. We appreciate the strong relationships we have had with many of you for several years now, and we've always valued your constructive input to help make us better. On behalf of the entire management team, thank you for your confidence and willingness to entrust your investment funds with Qwest. I hope we have provided a return for you that has appropriately rewarded your commitment to us. Looking forward, I continue to be excited about the prospects that will arise from the Qwest and CenturyLink combination. Our respective shareholders have already benefited from the operating and stock performance of the two companies since our announcement. Qwest shareowners will benefit from significant synergies and nearly 50% increase in dividends from today's level and accelerated deleveraging of the balance sheet. The combined company will have a strong and proven management team with a talented employee base. I remain firmly convinced this transaction will further bolster our results and drive superior shareholder value. Now we will take your questions.

[Operator Instructions] We'll go first to Simon Flannery with Morgan Stanley.

Teresa, I wanted to talk about the fiber-to-the-node product. Can you tell us what the average upgrade you're seeing in ARPU versus a standard DSL customer is? Obviously, you've got strong ARPU performance. How much of that is coming from there? And of the FTTN ads, where are they coming from? How many are coming from existing DSL customers versus coming from the cable side of things?

A couple of things. Yes, as far as the ARPU on the ATM customer, on average, it's about $36.81. And on the FTTN customer, it's about $39.19. So about a 6.5% difference there. And then I think your second question was the ATM conversion to FTTN is about 36%.

So 36% of your FTTNs are coming from DSL?

Right. Correct. From migration.

And the balance will be coming mostly from cable?

That's correct.

We'll go next to David Barden with Bank of America Merrill Lynch.

First, I guess, maybe Joe or Ed, obviously, since the CenturyLink transaction got announced, you guys have delivered on a lot of -- or surpassed a lot of your goals in terms of cost cutting and headcounts and balance sheet transition. Relative to the plan that you guys showed CenturyLink when you guys struck the deal to be merged, have you performed in line with that plan? Outperformed that plan? I guess the question goes to whether some of the synergies that were anticipated at the time of the announcement have already been realized by Qwest based on its performance thus far. And then the second question, if I could just quickly, you guys put out a -- or CenturyLink put out a joint statement with Windstream and the other RLECs about the transitions that are expected with USF and intercarrier comp. Is there anything about the merger that is going to change Qwest's position on rural compensation reform?

David, this is Ed, I'll take both those calls. We are in line with the plan that we showed CenturyLink. We're still encouraged, as we get deeper into this, that the joint company will deliver what's been previously announced. The plan is progressing better than any plan I've seen as far as the two companies and their plan in getting ready to go on day one. On the intercarrier comp, the combination has not changed either one of our positions here. As you know, we have always been for USF reform, and we think they're -- we cross our fingers, but we believe we are going in the right direction here to be more broadband-based than just what I'd call legacy based. So we'll see how that works out, how the intercarrier comp goes. I think our position's exactly the same as it always has been, and Century would be in the same place.

We'll go next to Michael Rollins with Citi Investment Research.

Just curious on the enterprise and business side. Can you talk a little bit more about what you are seeing from the competitive environment and whether within the whole scope of what you are doing -- are you seeing certain pockets, whether it's the larger enterprise customers, the medium-sized customer, be better or worse than maybe what you are seeing out of the smaller size customers?

Michael, on the larger end, I think the challenge has been and continues to be that everyone wants to hold on to their customers. Alright? So typically, a large customer has a pretty deep connection with somebody, and so we're all competitively pricing to retain our customers, which unfortunately means a bit of a write-down. And then, of course, we all work to fill in with additional new products. So the top is still very, very competitive, as far as trying to move a customer from one carrier to another. At the bottom of a small business, hypercompetitive as it's always been, because you have so many CLECs and resellers and integrators, and cable companies now are in there. But that's not different than it's been in the past. I would say it just continues at the same pace. And winners are people who are providing innovation in product bundles, in customer service. And I would say all the customers are demanding higher service. And that's what we focus on to deliver.

And within that context, are you seeing the existing customers that you have, as you're going through this process, today looking to buy more volumes maybe they would have a year or two years ago? So you may be underlying the totality of your business, you're starting to see a different behavior from your existing customers by way of volume?

Oh, absolutely. Volume is up. As far as demand for broadband services, or demand for fiber, absolutely. That's up. It has been and continues to be.

Yes, it continues to grow.

We'll go next to Tim Horan from Oppenheimer. Timothy Horan - Oppenheimer & Co. Inc.: Just maybe a little bit more color on access line trends, where you think they're kind of going for the industry today? I think they have accelerated a little bit on the downside for AT&T and now for you guys. And the same thing but just on broadband.

Tim, I would say access lines are just staying the same. I mean, the rate of decline is pretty steady. It tips a little bit up and down, but that somewhat seasonal. So, I would say, no change there. And on the broadband side, we're very excited that FTTN, or fiber-to-the-node, is increasing significantly. Our challenge continues to be the base of ATM and how to migrate that quickly and how to hold on to it and not lose it to a competitor. But the FTTN... Timothy Horan - Oppenheimer & Co. Inc.: Did you pull back at all in the marketing in the quarter?

Fourth quarter is always light for us, because it's extremely heavy in the advertising holiday. So we typically don't do a lot of TV, because it's too congested. So fourth quarter is always lighter for us, generally. And I mentioned earlier in my remarks that we're very excited about the in period that we're seeing already. So January through a little bit of February, that is looking very nice.

We'll go next to Scott Goldman with Goldman Sachs.

Two questions. First, I guess for Teresa on the Mass Markets side. Margins seem to be fairly stable for the last four quarters or so there. Just wondering if there's any further opportunity to take costs out of that side of the business? And then second question, I guess more for Ed, on the regulatory front, it looks as though Minnesota, this week, maybe delayed the approval of the deal possibly by another month or so into the March timeframe. So I'm just wondering, in light of that, if you can give some context as to why you guys are comfortable that April 1 could be the close of the deal?

On the Mass Market's cost side, yes, we do think there's more opportunity. I'll give you one example, is that about 15% of our new sales are coming in off the Internet now, which is a big effort we've had in place for a while to utilize that as a sales tools. So our network and facility side has become more efficient, as well as our marketing in our sales channel. So we do think there's more room there.

This is Ed. March 3 has been reset. We learned yesterday that for the new Minnesota hearing -- that's why we're confident. We believe there's some things to work out to get to the goalie here, but we believe are a long ways down here. We've got agreements with many of the CLECs already. We had agreements with many things that we were in line with the staff. So we feel confident that we'll get Minnesota done early. And the rest of the states, as we said, are looking good. So I feel pretty good about April 1, Scott.

And then one quick follow-up for Teresa. I know you've mentioned a couple of times now about the strength of broadband in the first quarter. Is that something you're seeing across both FTTN and DSL? Or is that something that's more weighted towards one or the other?

Well, it's always weighted to FTTN. But the ATM piece is slower as far as the decline we've seen off of it. But net is coming in.

Right. But it sounds as though the DSL has improved a little bit in the first quarter, though.

Yes.

We'll hear next from James Ratcliffe with Barclays Capital.

Clearly, a lot of cost reduction over time across all three segments of the business. When you look at the segments that continued to shrink, Mass Markets and particularly Wholesale, how do we think about what cost will do, when and if those start to return to revenue growth? Are we going to see costs turn up in line with growth in revenue? Or can you keep them at roughly current levels?

Our focus is on the margin. So as we have less pressure on the revenue, it does give us more room on the expense side. But to answer your question, absolutely. Sales costs go up if you have more sales activity, but we've been able to offset that with system changes or with our network or facility efficiency. So our focus is on that nominal margin piece, and that's what we think we can keep that balance and improve it.

You'll continue to have the good margins. You're not going to see anything drastically change if we can get the economy to turn around. And the key is driving that profitability.

But on balance then, a return to revenue growth in those segments would be a plus for margins, all else being equal, rather than potentially dragging on it.

Yes, without a doubt. That will help expand.

We'll go next to Frank Louthan with Raymond James. Frank Louthan - Raymond James & Associates: With your CapEx spend, is there any incremental focus on building out data centers or those sort of assets? Can you give us a little color on that? And then with your Verizon agreement, are you all able to sell the iPhone with that in your base? Any additional marketing opportunities over the next few months with that?

As far as the data center, we don't have immediate plans. We are always looking for opportunities. But we opened something last year, so we're feeling that right now and focusing there. But it is a great real estate opportunity. We'll always, always look at that. And then as far as Verizon, we are not selling the iPhone right now, but we will shortly.

We'll go next to Peter Rhamey with BMO Capital Markets.

A question for Teresa, just on enterprise. You talked about sales force productivity. I'm just wondering how much gas in the tank there is left on that? Are you hiring into 2011 ahead of the confirmation of the merger? I guess the enterprise segment sales force and the whole structure remains in place under CenturyLink. I'm just wondering what we can expect with regards to the ability to drive top line performance there. And the second question is also for Teresa. On Wholesale, you talked about a 2% revenue reset with migration from a major customer. How should we think about, and I think you did touch on it earlier, that wholesale revenue line? Is it stabilizing now? You spent two or three years trying to get rid of non-profitable business. Is this the core base of businesses that you have in run rate into Q4 2010 going into 2011? Or should we think there's additional revenue reset beyond the 2%?

As far as the Business Market enterprise side, yes, we are hiring. And we're also excited to join forces with CenturyLink, because they have a business side, too. So on the planning process right now, we're looking at the United States as a whole and determining where we should put ourselves, people and where we can get a maximized benefit from that. We do think we have more runway in the productivity. It's a constant focus, and we're happy with the results we had in 2010. We have good plans in place for '11. As far as the Wholesale, we do think it's starting to stabilize. It will continue to be in a decline, but the rate of decline is starting to feel pretty stable. And this major customer should be out of our network this year in 2011. Or actually, a little longer.

We'll go next to Dave Coleman with RBC Capital Markets.

On the Business Market group, just wondering how much of the strategic revenue growth is from migration from legacy services to new-to-category? And then you talked about, in the first quarter, broadband net adds improving. Just wondering -- I guess due to a new promotion, I was wondering if there's any sort of synchronization of promotions or pricing at Qwest with CenturyLink?

As on the business side, we have a little bit of migration that occurs. But honestly, it's more new sales. I mean, a lot of new activity in that space because that base has been dwindling for a long time. And as I mentioned earlier in the notes, it's very small at this point. And then as far as the Mass Markets side, no, we don't do any planning with CenturyLink right now. When they have the combined company, then I'm sure they'll make some decisions about how to price in markets.

And just to follow-up, you mentioned earlier the access line trends, pretty steady. But I guess, overall, it's pretty steady. But is there any change in the mix of gross adds versus disconnects versus six to 12 months ago?

Well, our problem has always been the new incoming. So we just don't have new activity. So that will pick up when we have a housing change or unemployment change. But the pressure on the access lines has been -- there's not any new additions. So if the economic change occurs, that could impact that a little bit. We're not planning for that. We're assuming that that's not going to happen, and it will be a repeat.

We'll go next to Michael McCormack with Nomura Securities.

This is Michael Liddell on for Mike McCormack. We just had a quick question on the 4Q DIRECTV net additions. They appeared to exhibit an improvement in overall strength. Can you help us understand what drove this strength and how that's progressing into 1Q and if there are any changes in the promotional activities for bundling DIRECTV with your products?

Mike, are you talking about the DIRECTV net adds?

Yes.

We always get a great fourth quarter because -- even to the end of third and the fourth because of the promotion that DIRECTV has in the market. Particularly the -- football just takes off, the other NFL tickets. So that helps us. And then they have been aggressive in the marketplace, and we just repackage what they do. So I think it will continue. I mean, we have a good partnership with them, and they provide us great sales support and marketing support. And it's a really, really strong relationship that we have with them.

But you're not changing the way you bundle the product going forward in 1Q?

No.

No, not at all. You should get the benefit of the NCAA tournament and NBA playoffs as you exit the quarter.

We'll take our final question from Kevin Smithen with Macquarie.

Can you give us some breakdown of the fiber backhaul CapEx in 2010 for the 2,000 towers that were built out? And maybe specifically for kind of the run rate in Q4?

Kevin, we don't have specifics for fiber-to-the-tower. Our fiber investment overall, fiber-to-the-tower as well as fiber-to-the-node, was a little under $300 million for the year. We're managing that on an integrated basis, so that's really how you want to look at that. So roughly $300 million all in, fiber-to-the-node and Fiber-to-the-Cell. Well that concludes our Q&A, and I'd like to also add to Ed's thanks, guys, for all of your support for Qwest. And in my case, I've been working with many of you for 16 years now. It's been a great relationship. I want to wish all of you the best as well. So have a good day, and if you have any follow-ons about our results, please feel free to give us a call at Investor Relations. Thanks.

Ladies and gentlemen, that does conclude today's conference call. We'd like to thank you all for your participation.