Ladies and gentlemen, thank you for standing by and welcome to CenturyLink's second quarter 2018 earnings conference call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. As a reminder, this conference is being recorded today, Wednesday, August 8, 2018. I would now like to turn the conference over to Valerie Finberg, Vice President, Investor Relations. Please go ahead, Valerie. Valerie Finberg - Chief of Staff, Office of the COO & Vice President of Corporate Communications and Investor Relations: Thank you, France. Good afternoon, everyone, and thank you for joining us for the CenturyLink second quarter 2018 earnings call. With us on the call today are Jeff Storey, President and Chief Executive Officer; and Sunit Patel, Executive Vice President and Chief Financial Officer. Unless otherwise noted, prior periods are provided on a pro forma basis, assuming both the sale of the legacy CenturyLink data centers and colocation business and the acquisition of Level 3 occurred as of January 1, 2017. Unless otherwise noted, revenue and sales comparisons to prior periods are provided on a year-over-year basis. Additionally, adjusted EBITDA, capital expenditures, free cash flow, and net debt to adjusted EBITDA discussed on the call today exclude integration-related expense and other special items as noted in our earnings materials. All of our supplemental earnings materials, including the presentation we will review on this call, can be found in the Investor Relations section of the CenturyLink website at ir.centurylink.com. You can see our forward-looking statements on page 2 of the 2Q 2018 earnings presentation, which says the presentation and remarks contain forward-looking statements. As such, they are subject to risks and uncertainties, and results may vary significantly from those statements. Additional information is available in our filings with the Securities and Exchange Commission. The presentation also includes the reconciliations of our non-GAAP financial measures to the most comparable GAAP measures. With that, I'll turn the call over to Jeff.

Thank you, Valerie, and thanks, everyone, for joining us on the call today. I'm excited about the potential we see in the business to continue to grow free cash flow per share. We believe this is the most important value driver in our business, and we had a good quarter on that front. A few thoughts to highlight, integration is going well, and we are ahead of plan for capturing synergies. We believe our global network assets, robust product portfolio, and our willingness to invest to meet our customers' needs enable CenturyLink to evolve as our customers evolve. In addition to the integration efforts associated with the acquisition of Level 3, we are also focused on transforming to more efficient operating models beyond the capture of synergies. Integration is about bringing the two companies together. Transformation is about enhancing our business for effectiveness, cost efficiency, and customer experience to move us to where we want to be as a company. We are working to create a more digital experience across our customer base from our Consumer customers to our largest Business customers. I'll talk more about these transformation efforts a little later, but we're excited about what it can mean for our employees, our customers, and our shareholders. As a result of the progress we've made in the first half of 2018, we announced that we are increasing our outlook for adjusted EBITDA and free cash flow for the full year 2018. On the call today, Sunit will provide an update on our detailed financial results and our updated full year outlook. I'll then provide an update on integration, transformation, and the company in general. After that, we will open it up for your questions. Sunit?

Thank you, Jeff, and good evening, everyone. I'll start on slide 4 with some highlights from the second quarter. We continued to execute well on capturing synergies this quarter, achieving approximately $675 million of annualized run-rate adjusted EBITDA synergies since the close of the Level 3 transaction, compared to $215 million as of the end of the first quarter 2018. We generated adjusted EBITDA of $2.27 billion. Adjusted EBITDA margin expanded to 38.5% from 35.7% in the second quarter 2017 on a pro forma basis. We generated free cash flow of $919 million, and we raised our outlook for full year 2018 adjusted EBITDA to $9 billion to $9.15 billion from $8.75 billion to $8.95 billion, and free cash flow to $3.6 billion to $3.8 billion from $3.15 billion to $3.35 billion. Turning to slide 5. Total revenue in the second quarter declined 2.3% to $5.9 billion, with declines of 1.2% in Business revenue and 5.9% in Consumer revenue. As we mentioned on last quarter's call, on January 1, 2018, the company prospectively adopted a new revenue recognition standard, ASC 606. Adjusting to exclude the revenue recognition standard, total revenue declined 2.1%, Business revenue declined 1.6%, and Consumer revenue declined 4.0%. For the second quarter, the revenue recognition standard negatively affected total revenue by approximately $11 million, with a $27 million negative effect on Consumer revenue. Business revenue saw a $16 million positive effect. Within Business, there was a benefit of approximately $14 million to the Medium and Small Business unit and approximately $4 million to the International and Global Accounts business unit. The Enterprise and the Wholesale and Indirect business units were affected minimally. Within Business, our Medium and Small Business revenue decreased 1.0%. Excluding the effects of the revenue recognition standard, Medium and Small Business revenue declined 2.6%,…

Thank you, Sunit. I'll start with an update on integration. I won't go into the initiatives I've discussed in previous calls, but I'll share a few integration highlights from the last quarter to give you some examples of the ongoing progress we're making. One of the key steps for a successful integration is rationalizing and standardizing your products. Today, we have a detailed rationalization road map across our company's extensive product portfolio, and are actively working to implement that road map. We've already launched the in-state version of several of our most important products. By combining the best of both companies' portfolios, we will end up with better products that neither of the previous companies would have had on their own, and our responsiveness to the market will be enhanced. And in areas such as Cloud, SD-WAN and Security, the more robust capabilities of the combined product portfolio enable us to compete for a broader set of opportunities. We've implemented a single standardized master contract for new sales, eliminating unnecessary time in the process. This has been well-received by our customers and our sales team. If you've never negotiated a sales contract for technology services, this may seem like a small point, but it's an example of our efforts to streamline processes, cut cost, and improve the customer experience across the company. We've implemented new automated service activation capabilities within our on-net building footprint to significantly reduce installation intervals so we can sell and quickly install services for small- to mid-sized businesses in those buildings, including in certain locations customers self-provisioning. Lastly, we continue to make progress moving customers from off-net to on-net. This progress takes a long time, but helps us win new sales, expands our network access margins, and drives a much better customer experience. As I said…

Absolutely, Jeff. Our first question will be from the line of Timothy Horan with Oppenheimer. Please go ahead. Mr. Horan, please go ahead with your question. Your line is open, sir. Timothy Horan - Oppenheimer & Co., Inc.: Sorry about that, guys. It was on mute. Great quarter. Congratulations. When you talk about exiting the unprofitable business, are you seeing any pricing power? Can you raise prices on some of the businesses where you've been losing money in the past? And can you maybe just elaborate a little bit more on your overall product portfolio, how it's kind of comparing to your competitors at this point? Thanks.

With respect to the product portfolio, first, we think we have a very effective product portfolio. We have – our customers have networking challenges. They want to connect to a variety of different locations with a variety of – for a variety of different needs. And whether it's Dark Fiber between two closely located data centers or waves between two remotely located data centers or MPLS in their core or SD-WAN on the edge or providing connected security to tie all that together, managed services, we think our product portfolio is very comprehensive and actually meets the needs of our customers. We focus less on what our competitors are doing and more what are the needs of our customers. With respect to pricing, we've never really complained about pricing one way or the other. It is what it is in the market, and we focus on making sure we're meeting our customers' needs and being competitive there. We are happy with the pricing environment, as you can see the margin expansion. Timothy Horan - Oppenheimer & Co., Inc.: Thank you.

Our next question from the line of Scott Goldman with Jefferies. Please go ahead.

Hey, guys. Thanks for taking the questions. I guess first on the synergy side of the equation, obviously pacing well ahead of at least our expectations, and pretty nice step up from 1Q. When you guys announced the deal last year, I think the target was about 80% of that $850 million within the first three years. You're pretty much at that target now. So I'm trying to figure out, is there an upside to that $850 million target, or are we due for a slowdown in terms of the incremental pacing from here? And then secondly, maybe just on the broadband side, if you could, just remind us what percentage of that base is sitting at less than 20 megabits per second. And, Jeff or Sunit, maybe, how you're approaching that portion of the base a little bit differently maybe going forward to try and retain more of those beyond just Price for Life? Thanks.

Okay. I'll take a stab. So on synergies, yes, we are running – as I said, we picked up the pace a lot. We still expect to be at $850 million. However, as Jeff said, as we sit back and look at all the benefits you can get from a digital future in terms of how we interface with our customers, we continue to think there will be cost transformation opportunities for us over the next years that we are doing the planning for and aim to take full advantage of over the next few years. So I think we're still at the $850 million, but we're obviously getting there quite a bit faster, as you pointed out, given that we are already at $675 million with two full quarters. And then your question on the broadband subscribers, generally, as we look at our broadband subscribers in the 20-meg, we have roughly about 40% in the 20-meg and then 60%, a little more than – or the other way around, I'm sorry, 60% in the less than 20-meg and 40% in the more than 20-meg. That's the mix.

And as we think about those customers, we're going to continue to invest where it makes sense for us to do that. And so we're looking at multi-dwelling units and high-density areas and places where we have an advantage to build out fiber infrastructure, aerial areas, and we'll continue to look at that. We also have to do a good job though in selling once we've activated those areas. We have a fairly significant portion of our network that is enabled at 100-meg or higher, and we need to do a good job of selling that. But we will continue to invest in it. We will invest in it smartly where we think we can get good returns on it.

Thank you.

I think I pointed out in my comments that I think we're doing a lot of planning now to actually take up the investment in Consumer that we've had a good chance to know, as Jeff pointed, to use the word micro-targeting in remote areas. It makes sense for us to put money. So I think you'll see the pace of investment in the Consumer side pick up and certainly on the CAF side.

Okay, thank you.

Thanks, Scott.

Our next question from the line of Mike McCormack with Guggenheim Partners. Please go ahead.

Hey, guys. Thanks. Sunit, let me just have a quick clarification on the CapEx intensity. It looks like that's remaining steady, but the overall CapEx guide has come down by $150 million. I'm just trying to get a reconciliation around that. And then as far as the Enterprise trends go, I know you mentioned a particular customer maybe being disconnected. But what are you seeing? Potentially if you can, give us trends that you're seeing legacy Level 3 versus legacy CenturyLink, just overall growth rates and what you're seeing in the marketplace. Thanks.

So the CapEx intensity I think has been the same. We've been at 16% of revenues and it's still at the same place. Obviously, we are running lighter than that in the first half of the year, which is why I said that in the second half of the year, our capital spending will be higher as we spend more money on the Consumer side with CAF and other initiatives. We'll spend more money turning up with the sales orders we receive with success-based capital. We'll be spending more CapEx to turn up more buildings on-net, to drive net ex synergies. We'll be spending more money for things like systems integration, other capital expenditure investments that will drive reductions in operating expenses. So the guide has been at 16% from the beginning, Mike.

Right. And just a clarification, does that change then to your expectation on the top line reflective of that?

No, I think the guide has always been as a percent of revenue. That's been consistent with our past practices. It's one way of saying that whether revenues move up or down, a big portion of the capital spending is success-based based on how we are doing on the revenue side. So it remains at 16%.

Got it, okay.

We don't have any revenue guidance per se. And as I mentioned, we saw our sales pick up over the course of the first quarter. And as I also said, the sales production in the second quarter was higher than what we saw in the first quarter, which is the other reason why I said we'd be spending more capital for success-based capital in the second half of the year. And then on the Enterprise trends, I think in general, we see our ability to gain market share on the Enterprise side as being very good. In the short term, as Jeff pointed out and as I mentioned, we are combing through what parts of the base of the revenue is not profitable and how to address that. Having said that, we are seeing notable wins. As Jeff pointed out, as standalone companies, we weren't getting a chance at. So when we look at our sales funnel volumes and when we look at our sales production, we are pretty happy about what's happening there, and that should drive better performance over time. But in the short term, whether it's unprofitable business, obviously you asked a question about legacy CenturyLink, legacy Level 3. Legacy CenturyLink had more legacy revenues if you like. So we're also dealing with that. You'll see more of that, for example in the Small and Medium-Sized Business segment. But in general, we're very excited about the combined company's network and our ability to gain market share. And we're already seeing it in the nature of the wins, as Jeff pointed to one particular example.

And we do like the mix of our product portfolio and think it fits well in the market with where our customers are going. Hybrid IT and hybrid networking are real things that are coming. The more we make our network flexible, controllable, and visible to our customers, the better off we are. And so we think we have a pretty good position there.

Great. Thank you, guys.

Sure.

Our next question is from the line of Matthew Niknam with Deutsche Bank. Please go ahead.

Hey, guys. Thank you for taking the question. Maybe on the back of the last question around revenues. I think, Sunit, you had talked about momentum in the sales funnel exiting 1Q. You're talking about increased productivity, but revenues were actually down sequentially. So, how do we think about the trajectory from here? Do we anticipate more pressure as you maybe weed out some less profitable contracts, or is there an opportunity to see some of this momentum begin translating into more stability and potential growth from here? Thanks.

Thanks. So I think from an overall perspective, we continue to see our business revenue performance improve over time. As I said, there are some short-term things that I mentioned specifically on profitable revenue, some legacy revenues. But overall – and there is a lag between us – sales production and the revenue usually showing up a quarter later. But – and also remember, we pointed to, in the fourth quarter, as we were closing the transaction we saw some sales weakness in the first quarter as the companies came together. We started up slow. But as the momentum in the sales production is picking up, you will start seeing it translating into our revenue transfer on the business side. So, we do firmly believe that we're going to see that happening over time.

And if I can just follow-up with one other question. When you think about investing and upping the investments in the Consumer business, can you help us just think about where the increased spend is going? Is it primarily CAF, or is it more in urban footprints where there may be a little bit of an opportunity to beef up speed? I'm just trying to get a sense of how we should think about where this increased spend is going to go. Thank you.

Yeah. So, as I said in my remarks, I think it will be for CAF, it will be in urban areas, as Jeff pointed out, where it makes sense. He mentioned specific examples like MDUs, condominiums, apartment complexes or areas where businesses and residences co-exist. It could be an area – in suburban areas with good socioeconomic demographics where we can extend our fiber network from the central office to a neighborhood. It could be things like new neighborhoods opening up where we, as a local phone company, we typically go there with high broadband speeds to start with. When you do that, the neighbors – the neighborhood surrounding those new areas, makes sense to offer high broadband speeds very profitably. So, we have different – numerous examples we can give you where we see that. So, as I said, I mean, when I compared the first half of the year to the second half of the year, we do see an increase in capital spending happening in these areas. We're focused on planning and identifying the right places, but then our deployment speed should pick up there. And that's also generally true not just with the Consumer side, but also on the Business side, as I say. More sales production, driving more success-based capital, more buildings on-net to drive net ex, we'll see spending pick up in that area in the second half of the year compared to the first half. And similarly, more CapEx spend to drive further OpEx reductions like in systems integration combining platforms and some of the customer experience initiatives that Jeff talked about.

Got it. Thank you.

Our next question from the line of Nick Del Deo with MoffettNathanson. Please go ahead.

Hi, thanks for taking my questions. First, regarding the low calorie revenue that you called out, can you give us any sense for how much revenue of that is in the base? And is it safe to assume that it's primarily in the legacy CenturyLink's out of the house?

So, I think the only reason we pointed this out in this quarter is because there were specific contracts that were large. I think, in general, there is no particular contract that amounts to anything of size that we are worried about. Most of the business generally is profitable. I think if you look at the EBITDA margins we talked about, the business overall is pretty profitable. It's just that it – this – the particular ones we highlighted was for two reasons; one, to underline the discipline of pursuing profitable business; and two, because it changed the trend a little bit because of these specific situations. That's the only reason we highlight it. But overall, in general, the base is fairly profitable.

And on these calls, Nick, sometime we talk about legacy this or legacy that. But internally, we don't think about any of these as legacy Level 3 or legacy CenturyLink. It's all CenturyLink going forward. And so we don't really focus on how we break those things out.

Okay, that's helpful. And second, obviously with the last big integration you had, TW Telecom, you also pulled in synergies at a much faster rate than originally expected. Are there a lot of internal issues down the road? Can you help us get comfortable with the idea that – and the speed of which you're executing on this front isn't going to lead to any hiccups at a later point?

Yeah. So, I don't think that the pace at which we captured synergies led the churn on TW Telecom. I think our focus led the churn on TW Telecom. When we acquired them, they had a large – small customer base that wasn't something that Level 3 particularly focused on, and so we took a large effort to move up market. And as a result, we took our eye off some of those smaller customers a little more than we should have. In this integration, we have Vernon Irvin and an entire team in what's called GEMS that is our small and medium business customer group that are focused on driving that penetration and the success with those customers. And we have a multi-pronged approach, everything from direct sales people that hit the street and go talk in multiple tenant buildings or people on call centers that do outbound call, inbound calls. We have a very strong focus in Vernon's team on that low end of the customer base. And I think CenturyLink, contradicting my last statement, the legacy CenturyLink has an expertise there that the legacy Level 3 didn't have.

The size of the business is a critical mass comparable to the size of the business that the cable guys have. Same number of zeros behind it. So, it's a business that we're very excited about because, to Jeff's point, we weren't really sell to that customer base in the legacy Level 3 on that building, so now we are much bigger on that building footprint as a combined company so we see quite a bit of opportunity there over time.

Yeah. So, Nick, I don't think – or excuse me, David, I don't think we did as good a job as we could have, but it wasn't because of the pace. Sorry, Nick. Yeah.

No worries, no worries. Thanks, guys.

Our next question will be from the line of David Barden from Bank of America. Please go ahead.

Hey, guys. Thanks so much for taking the questions. So, I got a handful just related to the guide to kind of clarify it all. So, Sunit, the question on the implied revenue guide. You have a lower CapEx number. People are dividing it by 16% and are coming up with a lower revenue number. Wondering if you are lowering revenue guidance by implication. So, the question is, do you have a different revenue expectation this quarter for 2018 than you did last quarter? The second question is – go ahead, go ahead.

No. Go ahead, go ahead.

So, the question was on EBITDA guide. If you could kind of unpack that, how much of the increase is synergies? How much of any of the increase is the actual underlying business? And how much is related to this one-off item that you called out in the quarter? And then, the last question...

There's a lot of item in the quarter. I'm sorry I didn't catch that.

You called out that you had a one-time item in the quarter. I think it was in the Enterprise Business...

Okay. The settlement, yeah.

Yeah.

Okay.

And then the third one was just, extending that analysis down to the free cash flow line, the change in free cash flow there is going to be – again be synergies plus core business. But then there was also that other kind of one-off element of tax refunds and working capital changes. And if any expectations on that has changed. That'll be helpful. Thanks.

All right. So, a lot of questions. I'll try to get – if I missed anything...

I'll remind you.

So, look, – no, I think, David, we provided capital expenditure guidance for years at Level 3, and 16% is the guide we provided. It's not meant to implicitly or explicitly refer to anything with respect to revenue. We don't provide revenue guidance. You can back-calculate anything you want. I think the main point is, we're investing pretty significantly. It's 16% of revenue. That guide does not include integration expenses, and it's just that simple. You can think anything else, if you wanted, of it, but this is consistent with longstanding past practice we have. It's 16% of revenue. We feel good about that, and I think that's what we are looking to. It has no tangential bearing to revenue, anything like that.

And we're highlighting that we're a little bit below that right now. Bu that's come from some good things that we've found, capital synergies and other things that we think we can do a better job, better management of the capital expenditures. But in the second half of the year, we think it's going to increase, and that the full guidance for 16% is still the full guidance.

On the EBITDA stuff from the one-time settlement, it's not meaningful. We now generate – if we take this quarter, the $2.2 billion of EBITDA, first of all, in any given quarter, there are fair number of offsetting items. The only reason I mentioned that is that within that particular segment, it helped the results slightly. Within the overall results, it's a nothing. There are so many things happening. It's minimal. It's not even worth talking about, which is why I didn't put in an amount. So it's not really meaningful. And then similarly, on the free cash flow, the first tax refund, we already talked about previously. So there was no surprise there. The second tax refund, we took all of that and added some extra money and contribute another $400 million. So that's a wash. So there's nothing – meaning that whole – the additional tax refund that we hadn't talked about got all contributed to the pension plan. So net-net, we've increased the cash flow guide pretty significantly driven by the EBITDA increase, and the incremental tax refund went straight to contributing to the pension plan. So it's actually a fundamental increase in the guide. There is not much happening in other places that's driving that...

Great. And just...

...with that increase.

And just one follow-up, Sunit, is just as you think about that guidance increase in EBITDA, is it all about synergies? Is it mostly about synergies and a little bit about the business? Can you give us some color as to what's...

Yeah, so...

...the moving part there?

I think the big news there is synergy driven essentially, because the revenues are declining slightly, so we see margin losses from that every quarter, which has been the case over the last few quarters and will be the case over the next few quarters. But it's primarily driven by synergies.

Great. Okay, guys. Thanks so much.

Our next question from the line of Philip Cusick from JP Morgan. Please go ahead.

Hi, guys. A couple of follow-ups. First, in Consumer, is there a point at which you can tell us what your overall CapEx sort of strategy is? Or is this a bit of a constant work in process?

I think the overall strategy is to get more – to spend capital where we can profitably, whether it's to help drive higher broadband speeds. And in general, that's what we are doing. The key is targeting where we have those opportunities, and, two, making sure we're actually delivering on the penetration that we think is reasonable. And really that's the essence of the strategy. And Jeff has a couple things.

It's not a very clever strategy. It's, let's spend money where we can get a return on our investment, and there are different places that make sense. We'll continue to look at how do we get more network for the same dollars. Can we get capital efficiencies and synergies out of designing better networks, can we focus on areas with aerial plant versus underground plant, can we focus on areas that are closer to the central office than further than the central office? So it's certainly a work in progress, but the answer is driven by the same things. Can we make money, is it a smart decision for how we invest in providing those services.

And that, when combined with the Price for Life offering, has fundamental implications for our cost structure internally just by radically simplifying how we reach out to customers. They don't need bills every month. They're not going to be talking about billing errors. Those things have a lot of costs internally.

And we are looking – I mentioned it in my earlier comments – that we are definitely looking at how do we transform our business. And in particular, for our Consumer customers, how do we transform the digital experience that they have. There are a bunch of them. A little bit of savings from each of them adds up. And so we look at that just because of the volume of activity and say this is an important thing for us to continue to focus on. We look across the company, how do we improve their digital experience with us, but the Consumer business is part of that, and we'll continue to invest capital to simplify that business for the customers.

And on that front, to give you a sense of the momentum for it, if you go back to over a year ago, we had no Price for Life, and now 40% of our consumer base has Price for Life. That is pretty radical and transformational. And those are the fundamental implications...

Okay.

...for the cost of us supporting that business.

But we shouldn't look for any sort of – we're going to have x-million fiber and y-million wireless homes at some point. This is more of a gradual figuring it out as you go what makes sense and which area type of plan.

But it's certainly helped powered by things like big data, machine learning, algorithms, artificial intelligence, marrying up the network footprint in the households and addressable market correlations, where enterprises exist, where we have wireless load opportunities. So it's a lot more richer than what you might have thought about 20 years ago, we were trying to walk neighborhood by neighborhood trying to figure that out.

Thank you.

(49:23).

And on the Consumer side – I'm sorry, excuse me – on the Enterprise side, the industry overall was fairly weak on business telecom spending. And we haven't seen any improvement with tax reform or the economy heating up. You said you're happy with pricing. What do you see in the market overall compared to a year ago?

I think the tax benefit is obviously very powerful. You can see how it's helped us at the company for example in terms of pension contributions and other things. But I do believe that – we believe that as you see things like 5G, Internet of Things, machine-to-machine-driven bandwidth demand increases for people consuming more entertainment on mobile, as all of these things are happening in Enterprise, we have to serve those needs. We are definitely well-positioned with the depth and capillarity of our networks to ride that with hybrid network, all the things we have talked about, SD-WAN.

If you move upstream from the taxes, upstream to the demand generators for our products and services, we don't see any change in any of that. Bandwidth is increasing. It's going to accelerate the increase over the coming years. It's not going to decelerate. It's not going to hold flat. It's going to continue to accelerate. The number of locations that traffic is coming from, whether they're enterprise locations or IoT devices within those enterprises, the number of locations that traffic is coming from is going to continue to increase. The complexity that CIOs are dealing with is going to continue to increase as they look at hybrid IT and hybrid cloud, multi-cloud environments, how are they going to manage all their loads across all these clouds, the need for flexible bandwidth for flexibility and control and visibility into that bandwidth is going to increase. The need to secure it with embedded or connected security is going to increase. So as you look upstream from the tax code, all of the drivers of our business are continuing to be drivers. Now, will over time the tax benefits encourage people to spend more? We hope so, but they're going to spend regardless in continuing to upgrade their capabilities to match the changing environment and their changing needs.

Good. Thanks, guys.

Our next question from the line of Amir Rozwadowski with Barclays. Please go ahead.

Thank you very much for taking the questions. Just dove-tailing on the prior question, how do you see the shifting competitive landscape at the moment? Clearly, if we think about your portfolio of assets and where you're strategically investing money at this point, have you seen a material change in terms of the competitive landscape and your ability to garner additional wins and things along that nature?

I've said this for so long, a lot of you are probably tired of hearing about it. But I believe our ability to win is based on our execution, not our competitors, not any other things, but we just have to execute better. So no, I don't really see a difference that much in the competitive landscape. From one quarter to the next, some competitor may emphasize one thing more than they did the previous quarter or emphasize one channel more than they did the previous quarter, but our ability to win is based on our ability to execute. We have to have the right products over the right network, targeting the right customers with the right value proposition. And as Sunit said, we saw sales pick up first quarter to fourth quarter and second quarter to first quarter. So we think that the products and services and capabilities are resonating well. Now we have to continue to install, and we have to continue to do a great job at service assurance and reliability, but it's up to us, I think.

And then to add to what Jeff said, we are the second largest provider of wireline telecom services to enterprise. It is 76% of our business. If you look at all the other competitors, the two telephone companies is at most a side business. Wireless is their main business. And the other two guys, their main business is providing broadband and media services. And again, the Enterprise business is a side business. So among the five big competitors, we are the only one where it is our business serving enterprises.

That's very helpful. And then just touching upon the commentary you made about the sales funnel improving and the conversion to revenue, do you have a good sense at this juncture when we should start to see that sales funnel more accurately reflected in the revenue trajectory or when you potentially could see a return to growth on the top line? Thanks.

So I think we generally don't provide revenue guidance. Having said that, I do believe that you will continue to see us over time drive better and better revenue performance and drive that Enterprise business to growth. We haven't outlined any specific timeline. But I think as you look at us on a year-over-year basis, you will see that with our focus and our execution, as Jeff pointed out, we will start delivering on better underlying revenue trends and drive that Enterprise business to growth.

Thank you very much for the incremental color.

Our next question will be from the line of Simon Flannery with Morgan Stanley. Simon Flannery - Morgan Stanley & Co. LLC: Great, thank you. Good evening. Jeff, it was helpful getting the color on the transformation initiatives. How should we think about the opportunity there both in terms of the dollars or the cost savings and also the timeframe to achieve? Is the opportunity here comparable to the deal synergies? Is that a good way to think about the size of it? And then on the synergies achieved to date, how much of that is network synergies you've talked about that taking a longer time? So, is there still lot of those to go or have you already recognized quite a few of those?

Sure. I'll answer the first one, then let Sunit answer the second one. I'm not going to size what the synergies are – or the cost savings are that come from transformation. I'll tell you the benefits of it, and I'll talk about the timeline a little bit. Now, the first thing that we did as a result of transforming our business is a simplified employee experience. They can do a better job for our customers if we simplify their environments. It's not about bringing the two companies together. It's about changing the work that they do and making it easier for them to do it. If we do that, then we drive a better customer experience. And we drive a better – we drive costs out and we drive a better customer experience along with the better employee experience. When we drive better customer experience, we see this time and time again across every business unit, if we drive a good customer experience, we reduce churn and we sell more. And those things are the primary benefits of it. Now this is not a short-term thing. Is it transformational? I mean, I wouldn't use that word if I didn't think it was big and impactful and really change our business. It's not little step around the edges. We have to transform our business, be very aggressive about it, but it does take a long time. But it's also one of those things that we have to do concurrently. It's not we're going to wait till we're done with synergies and integration and then we're going to start on transformation, we have to define what we want to be right now, and we have to start moving toward that right now. And without kind of – really kind of bounding the scope of it, we do think that it creates a very good path forward for us as we look out at our business over the next four and five years. Simon Flannery - Morgan Stanley & Co. LLC: Right.

Okay. So to add to that, which I agree with, I think that we said in prior quarters, Simon, that combined with synergies and other opportunities, we see the opportunity to take – expand our EBITDA margin 500 to 700 basis points, so 5% to 7% from the starting point or roughly about 35%, 36%. As you saw with this quarter, we are in the 38-plus percent range, so certainly plenty of margin expansion opportunity ahead, with synergies and cost transformation. So hopefully that helps. And we say it'll take us several years to do that, but we continue to feel very comfortable and confident about it without bounding it per se. And then your question on net ex synergies, so for the – since closing in November 1, predominantly, most of the synergies have been on the operating expense side, not on the network expense side, and most of the mix between the operating expenses has been on the head count side followed by non-head count-type synergies, whether it's real estate exits or cutting duplicate fees to vendors, systems integration, that sort of thing. However, that is not atypical of what we see in a big combination. So what that means is as we look at the second half of the year and next year, we'll see more cost savings coming out of the network expense side, and those opportunities will exist for the next several years. So, we do see network expense picking up in subsequent periods in terms of synergies. Simon Flannery - Morgan Stanley & Co. LLC: Right. Thank you.

Our last question will be from the line of Brett Feldman with Goldman Sachs. Please go ahead, sir. Brett Feldman - Goldman Sachs & Co. LLC: Thanks for squeezing me in, and just coming back to the residential side, you talked about how it can make sense to tick up investment where you think you can get returns. Does that imply that your overall level of capital intensity could move higher over some period of time? I know you've given guidance for this year, but maybe just thinking bigger picture, where do you think you can meet those investment objectives within sort of your standard CapEx budget? And then you mentioned some wireless opportunities. I'm curious, there is going to be a few opportunities to maybe acquire spectrum over the coming quarters. Do you have any interest in using your balance sheet to buy spectrum licenses? Thanks.

So I'll speak for Jeff, but, no, we don't expect us to be buying any spectrum. I'll let Jeff explain what he meant by that. We won't be participating in any of those. So, no, we don't expect the capital intensity to go higher. As I said, we're already running a little light first half of the year, and we expect that to ramp up second half of the year both in Consumer, dealing with additional sales order volumes, and driving more on that footprint and investment to enable more digital platforms. So, no, all of that, I think, fits within the 16% we talked about. Also remember that we squeeze – squeezing out a fair bit in CapEx synergies, so that also helps us. So, I think that's all contained in what we said. So over time, we don't expect the capital intensity to change. However, if we see more profitable opportunities or higher levels of sales production at good returns, we won't hesitate to spend more. But from based on what we see today, we think that's really appropriate. It's a pretty healthy level of investment both in absolute and in comparison to other carriers. So, Brett, I think we're quite comfortable with that.

Yeah. And, Brett, on the hybrid fiber-wireless side stuff, I mean, you're seeing that we are working in the rural markets to look at different technologies to build broadband services to rural customers more efficiently and effectively under a CAF program. We'll continue to do that. If you look at unlicensed spectrum in the rural, it's not as much of a problem as unlicensed spectrum in an urban market. And so there are different things that we're looking at. I don't see us going out and being a major buyer of spectrum in wireless, but we're open to how do we best serve our customers and what things make sense. In the densities of an urban market, direct fiber is not a bad thing, and so we'll continue to look at all of those. We'll look at how we're going to serve the 5G carriers and how do we lay that fiber in such a way that we benefit our consumers, our small and medium business, our large business customers, our federal government customers, our state government customers. We get the benefit of looking across that whole customer set and saying we're going to invest in the infrastructure to support all of them. And so we'll continue to do those things, but I don't see us going out and buying – being a major player in some spectrum auction. Brett Feldman - Goldman Sachs & Co. LLC: Great. Thanks.

Sure. I think that's the last question, so I'd like to close the call with a recap of a few thoughts. We are focused on profitable revenue growth and believe we have a strong market position. We're confident in our ability to effectively integrate Level 3 and capture the synergies we've previously announced. In parallel, we're investing in transforming our company to continually enhance the customer experience, simplify the operating environment, improve our effectiveness, improve our cost efficiency. We have a disciplined approach to managing the business and are looking at many opportunities across the company. And as you can see from our raising our guidance, all of these efforts are part of our objective to grow adjusted EBITDA and free cash flow per share. Thank you for joining today's call and for your support of CenturyLink. Operator, that concludes the call.